Like all the children from Lake Wobegon, I am sure all my readers are above-average investors. But I am also sure you have friends who are not, so in this letter we will look at the reasons why they fail at investing, and how they should analyze funds and determine risk.
Early March, I sent out a letter to all my clients with the byline ‘It is scary’. The basic premise of that admittedly long letter was that we were experiencing what I’d like to call a ‘bubble of pessimism’. I recommend a reread of that letter – the lessons have since been burned into your portfolio.
There’s an excellent article in the April 9th, 2011 edition of The Economist under the byline ‘The Foolishness of Crowds’. In many instances it’s been shown that the judgment of a group (or crowd) is often superior to that of the most skilled individuals within the group.