January 1, 2010 – Financial Planning Magazine – (Abstract) Allan Roth writes shares his key takeaways from reading “The Little Book of Safe Money” by Jason Zweig: 1) People don’t like uncertainty or randomness so they look for experts who can make predictions about the markets; 2) We all are subject to “recency bias” in our ability to look ahead, that current events impact our thinking more than long term events; 3) Asset allocation is alive and well. Although all assets classes suffer in a major downturn, diversification is definitely beneficial during upturns or minor downturns; and finally 4) making decisions about when to get out (during downturns) and in (during upturns) of the market AND being right half the time results in inferior returns compared to practicing basic “buy-and-hold” investing.
To read the full article: https://secure.financial-planning.com/fp_issues/2010_1/addiction-to-prediction-2665136-1.html?pg=1
