“The need for patience [is necessary] if big profits are to be made from investment. Put another way, it is often easier to tell what will happen to the price of a stock than how much time will elapse before it happens. The other is the inherently deceptive nature of the stock market. Doing what everybody else is doing at the moment, and therefore what you have an almost irresistible urge to do, is often the wrong thing to do at all.” Philip A. Fisher
Legendary investor Philip Fisher was willing to pay more for a stock he felt it had high growth-potential regardless of the fact that it might not be an undervalued company according to value-investing standards. However, Fisher warned against the purchase of promotional companies and falling for the usually manipulated tone of the financial statements.
Philip Fisher is among the most influential investors of all time. His investment principles, introduced six decades ago, are studied and applied by today’s finance professionals. He recorded these principles in Common Stocks and Uncommon Profits, a book considered by investors as a must read when it was first published in 1958.
According to Philip Fisher, investigation was the key to successful investing. And, he used a variety of means to research and deeply analyze a company.
Fisher’s approach to growth stock investing was something he called ‘scuttlebutt’. ‘Scuttlebutt’ is the process of going beyond the financial statements or company disclosures and investigating the internal and external stakeholders of the company to get in-depth information and wider perspective on the business to realize growth potential.
Philip Fisher’s 15-point approach essentially attempts to determine whether a company is in a position to continue to grow sales for several years, has an innovative and visionary management, strong profit margins, effective sales organization and high-quality management. Fisher also argued against over-diversifying and, in his heyday, tended to hold only about 30 stocks.
Fisher recommends investors rigorously analyze and ask probing questions of a company regarding:
Long-term sales growth potential,
Competitive edge (moat),
High management capability and Vision,
Effective research and development undertaken by the company,
Strong profit margins, and
Internal company relations;
The findings and answers from these questions can help an investor find the right growth stock to keep for the long-run.
In short, Fisher believed that…“Such a study indicates that the greatest investment reward comes to those who by good luck or good sense find the occasional company that over the years can grow in sales and profits far more than industry as a whole. It further shows that when we believe we have found such a company we had better stick with it for a long period of time. It gives us a strong hint that such companies need not necessarily be young and small. Instead, regardless of size, what really counts is a management having both a determination to attain further important growth and an ability to bring its plans to completion.”
“It’s always okay to own a stock of a good company for the long term that has a strong balance sheet, growing revenue and earnings, increasing free cash flow and efficient management.”
Peter Lynch based his success to investing principles on owning stocks of a good company. His overall strategy, based on a few core concepts, is surprisingly simple. A few of the most salient points are:
Invest in what you know. Be very wary of complex investment stories and instead, prefer stocks that are readily understandable. With consumer spending driving two-thirds of the U.S. economy, products and services desired by most consumers would be good investments.
Invest in companies with strong foundations. Companies with certain traits make them easier to buy and hold for the long run. On the business side, look for competitive advantages, such as high barriers to entry or efficient scale. Also, you should prefer stocks that have solid cash balances and conservative debt-to-equity ratios. “It’s hard to go backward if you have no debt,” Lynch once said.
Focus on value. Invest in value stocks that trade at cheap valuations based on their price-to-earnings (P/E) ratio. But, also considered growth as part of the equation and thus don’t automatically reject a high-P/E stock at a reasonable price if it had a high growth rate. Covet strong companies that are undervalued because they operate in out-of-favor industries.
Lynch is famous for introducing price/earnings-to-growth (PEG), which factors growth into value. He also used a dividend-adjusted PEG ratio, since cash from dividends is part of the total-return equation.
Here are important financial ratios that are recommended that you utilize in your financial analysis of a company:
Stock price
Market cap
Price to book value ratio
Earnings per share
Price to earnings ratio
Net profit margin
Debt to equity ratio
Return on equity
Dividend payout ratio
Free cash flows
Cash on hand balance
Dividend yield
Lynch writes in his book, One Up on Wall Street: “In general, a P/E that’s half the growth rate is very positive, and one that’s twice the growth rate is very negative.”
Furthermore, Peter Lynch liked:
Strong players in out-of-favor industries and decent valuation
Companies that generate recurring revenues and provide essential services;
Businesses with a solid financial position and generate above-average profit margins.
A solid, growing performer with relatively low net debt.
Research, patience and discipline
Overall, Lynch’s strategy looks for stocks trading at a reasonable price relative to earnings growth that also possess strong balance sheets. In short, nobody is born a great investor. Research, patience and discipline are what will eventually transform a novice investor into a seasoned stock picker.
T-Mobile confirmed that its customers’ data had been accessed without authorization in a breach that may impact more than 100 million of its users.
According to an underground forum post, the data for sale includes social security numbers, phone numbers, names, physical addresses, IMEI numbers, and driver licenses information.
T-Mobile is conducting an extensive analysis alongside digital forensic experts to understand the severity of the breach, and they’re coordinating with law enforcement.
This is the third time in recent years that a data breach has hit the wireless carrier.
Have You Been Pwned
Have you been affected by a past or recent data breach? Fortunately, you can minimize your chances of getting “pwned” in the future by using https://haveibeenpwned.com/, a free tool created by Troy Hunt, a Microsoft Regional Director and Most Valuable Professional awardee for Developer Security.
The word “pwned” has origins in video game culture and is a derivation of the word “owned”, due to the proximity of the “o” and “p” keys. It’s typically used to imply that someone has been controlled or compromised, for example “I was pwned in the Adobe data breach”.
The “Have I Been Pwned” (HIBP) site can reveal whether your log-in credentials, financial data, or other details have been stolen or leaked online, and send email alerts about new data breaches.
To tighten up your digital security, it’s important to know which of your accounts have been affected. That’s a task you can accomplish at the free site “Have I Been Pwned”, a resource that is widely recommended by security experts and by Consumers Reports. (The term “pwn” is hacker jargon for compromising or taking control of a computer or an application.)
Consumer Reports has been steering people to Have I Been Pwned for years, and the site has gradually become more robust, adding features and expanding its records of compromised data.
Have you been affected by a data breach? Minimize your chances of getting “pwned” in the future by using @haveibeenpwned, a free tool https://t.co/D6hgo5iA65
Data breaches are rampant and many people don’t appreciate the scale or frequency with which they occurred, according to HIBP. By aggregating the data helps victims learn of compromises of their accounts, but also highlights the severity of the risks of online attacks on today’s internet.
“Choosing what age to start collecting Social Security retirement benefits and which type of benefit to claim are extremely challenging and difficult.”
Social Security is a program managed by the federal government (Social Security Administration). The program works by using taxes paid into a trust fund to provide Social Security benefits to people who are eligible. It provides you with a source of income when you retire or if you can’t work due to a disability. It can also support your legal dependents (spouse, children, or parents) with benefits in the event of your death.
Understanding your Social Security benefits and when to claim those benefits can be challenging and complicated. “There are 2,728 rules in the Social Security handbook,” said Laurence Kotlikoff, Boston University economics professor and Social Security expert. “And then there’s literally hundreds of thousands of rules about those 2,728 rules. It’s the most complicated system I think mankind has ever developed.”
As a result of the program’s complexity, most Americans do not have a good understanding of Social Security, according to a Nationwide Retirement Institute® 2021 Social Security Survey. Moreover, many people don’t know what they don’t know:
Social Security is a “pay as you go” program; most of the Social Security taxes paid by today’s workers go straight to the benefit checks for today’s current retirees.
Only 16% know what age they are eligible for full Social Security benefits. For those born in 1960 or later, full retirement age is 67.
45% believe Social Security benefits will go up automatically when reaching retirement age after filing early. Filing early locks in a permanent reduction in Social Security benefits.
Half of U.S. adults (54%) don’t know what percentage of their income will be replaced by Social Security. It depends on lifetime earnings, but for middle-income individuals the replacement rate is usually around 40%.
55% believe or don’t know Social Security benefits are tax free. They are for low-income taxpayers, but for most people up to 50% of benefits are taxable.
Source: Nationwide Retirement Institute® 2021 Social Security Survey
How much you will receive from Social Security when you retire depends on how much you’ve earned and how long you have worked under the Social Security system. Your retirement benefit will be calculated by the Social Security Administration (SSA) based on your average lifetime earnings, but only your highest 35 years of earnings will count and only the years that you paid Social Security taxes.
The amount you receive will also be affected by whether you start collecting benefits early (you’ll get less), whether you collect benefits late (you’ll get more), whether you work after you retire, whether other family members receive benefits based on your earnings record, whether you collect certain other government benefits, and whether the cost of living rises.
It’s important to understand that Social Security is designed to provide a safety net of income for the retired, the disabled, and survivors of deceased insured workers. And, a key consideration for when you claim Social Security benefits is to maximize your income for a retirement that could last longer than 30 years.
The contributions you and your employers make during your working years provide:
Current retirees and other Social Security recipients with payments
A guaranteed lifetime income benefit when you reach retirement
Your base benefit or primary insurance amount (PIA) is calculated according to your “full retirement age,” or FRA, and your FRA is determined by your date of birth. If you claim Social Security benefits any time before your FRA, you lock in a permanent reduction in monthly income. Claiming at 62 translates to a reduced monthly income of 25% to 32%, relative to your FRA monthly benefit. That means you may receive less monthly retirement income, every year, for potentially several decades.
By waiting until age 70, you can lock in increased monthly benefits. If your FRA is 67, your monthly income would increase 24% by waiting. The facts are:
Age 62 is the earliest you can claim your benefit
Waiting to claim Social Security after age 62 results roughly in 8% increase in monthly income per year for each year you delay claiming (up to age 70).
If your FRA is 66, your monthly income would increase 32% by waiting.
If your FRA is 66 years and 10 months (if you turned 62 in 2021), your monthly income would increase 29.2% by waiting.
While the government does not have a specific account set aside just for you with your FICA contributions (the taxes for Social Security and Medicare paid by you and your employer), one of the most powerful features of Social Security is that it provides an inflation-protected guaranteed income stream in retirement, ensuring against the risk you’ll outlive your savings.
Even if you live to 100 or more, you’ll continue to receive income every month. And, if you predecease your spouse, your spouse also receives survivor benefits until their death.
“As of 2021, due to increased longevity and a decrease in the number of workers per beneficiary, and if changes are not made to the existing system, the Social Security Administration’s surplus fund will be depleted by 2034.”
Social Security is primarily financed through a dedicated payroll tax. There are also two other sources that fund this pool of money:
Taxes on some recipients’ benefits
Interest earned on the pool of money (Surplus Fund)
“As of 2021, due to increased longevity and a decrease in the number of workers per beneficiary, Social Security will have to tap the surplus fund to meet its obligations. And, if current projections are correct, Social Security will have enough reserves to pay out 100% of its promised benefits until approximately 2034”, according to The 2020 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds from the Social Security Administration.
Although there is time for Congress to fix the problem, if changes are not made to the existing system, the surplus fund will be depleted by 2034. The original pool of money will still be funded by payroll taxes, benefit taxes and interest, but beneficiaries would begin receiving reduced benefits. Which means that benefits will remain fully payable until at least 2034, with 79% of benefits payable through 2093 and 73% of benefits payable thereafter. These estimates assume that the existing system remains unchanged.
In general, you can cancel your Social Security claim if you do so within the first 12 months of receiving benefits. But, you must repay the full amount you’ve received, and the full amount a current spouse or family member received based on your benefit. Then, you’re eligible to claim again at a later date and will receive a larger monthly payment. Each individual can only cancel a claim once in their lifetime.
“Social Security can add certainty and stability to a retirement income plan, especially given the surprises that may come at retirement.”
Claiming Social Security is an important part of your retirement income plan, but it can be challenging to understand your options—and the implications to your savings. Social Security can form the bedrock of your retirement income plan. That’s because your benefits are inflation-protected and will last for the rest of your life in retirement.
While it’s true that your monthly benefit checks will increase if you delay retirement until FRA, you’re not likely to get more money altogether by waiting. The whole reason early retirees get smaller checks while those who delay benefits get larger checks is so that the average person gets the exact same amount of money from Social Security during their lifetime.
Most Americans claim their benefits at age 62 or just a few years later, according to SSA. That’s not always a mistake. If they have done a good job of analyzing their situation. Claiming at 62 would reduce your monthly checks, but you would have an additional four to five years of income before you reach full retirement age. Based on the Social Security Administration’s life expectancy tables and projected inflation rates, the lifetime expected total benefits are within a few hundred dollars of each other, regardless of when you claim.
If you have a robust retirement fund and don’t necessarily need the extra money from Social Security, there’s no harm in claiming early, according to Motley Fool. Moreover, if you have reason to believe you may not live very long in retirement, you may want to claim earlier to make the most of your benefits.
Bottomline, Social Security is part of the retirement plan for almost every American worker. It provides replacement income for qualified retirees and their families.
Your decision about when to file for Social Security benefits will affect your income in retirement. However, if you’re worried about outliving your savings, delaying benefits might be one of the best retirement decisions you’ll ever make.
There are 30 Dow Jones stocks designed to serve as a bellwether for the general U.S. stock market.
Founded in 1896 with 12 stocks, the Dow Jones Industrial Average is one of the oldest stock market indexes and one of the most popular. It is designed to serve as a bellwether for the general U.S. stock market and an indictor of the overall U.S. economy. It is widely-recognized stock market indices. It measures the daily stock market movements of 30 U.S. publicly-traded companies listed on the NASDAQ or the New York Stock Exchange (NYSE). The 30 publicly-owned companies are considered leaders in the United States economy.
The index changes when one or more components experience financial distress that renders it a less important company in its sector when there is a significant shift in the economy that needs to be reflected in the composition.
Recent changes that occurred include:
March 2015, Apple replaced AT&T
September 2017, DowDuPont replaced DuPont. (Following the merger of Dow Chemical Company and DuPont)
July 2018, Wallgreens Boots Alliance Replaced General Electric
Other major stock indexes include the technology-heavy Nasdaq composite and the S&P 500 index — an index of the 500 largest companies in the United States.
The stock market historically performs similarly to the business cycle of the economy. A bear market (prices decrease 20% or more) occurs during a recession and a bull market (prices increase) during an expansion.
Business Cycle Phases.
The business cycle is the natural rise and fall of economic growth that occurs over time. The business cycle goes through four major phases: expansion, peak, contraction, and trough. The cycle is a useful tool for analyzing the economy.
“The public’s careful when they buy a house, when they buy a refrigerator, when they buy a car. They’ll work hours to save a hundred dollars on a roundtrip air ticket. They’ll put $5,000 or $10,000 on some zany idea they heard on the bus. That’s gambling. That’s not investing. That’s not research. That’s just total speculation.” Peter Lynch
For the 13 years, Peter Lynch ran Fidelity’s Magellan® Fund (1977–1990). During his tenure, he earned a reputation as a top performer, increasing assets under management from $18 million to $14 billion. He beat the S&P 500 in all but two of those years. He averaged annual returns of 29% which means that $1 grew to more than $27.
Additionally, Lynch has authored several top-selling books on investing, including One Up on Wall Street and Beating the Street. He has a plain-spoken manner and offers wisdom on investing that can help you become a better investor.
To become a successful investor, you really need to “have faith that 10 years, 20 years, 30 years from now common stocks are the place to be”, according to Lynch. “If you believe in that, you should have some money in equity funds.”
Yet, “there will still be declines”, Lynch says. “It might be tomorrow. It might be a year from now. Who knows when it’s going to happen? The question is: Are you ready—do you have the stomach for this?”
Long term, the stock market has been a very good place for investors to employ their money and capital. But whether the market will be 30% higher or lower in 2 years from now…nobody knows. “But more people have lost money waiting for corrections and anticipating corrections than in the actual corrections”, according to Lynch. “I mean, trying to predict market highs and lows is not productive.”
“In the stock market, the most important organ is the stomach. It’s not the brain.” Peter Lynch
Theoretically, in Lynch’s opinion, the individual investor has an edge versus the professional in finding winning companies (“10-baggers”) that will go up 4- or 10- or 20-fold. They have the opportunity to see breakthroughs, company’s fundamentals get better, and analyze companies way ahead of most people. That’s an edge and you need an edge on something to find the hidden gems.
“The problem with most individual investors is people have so many biases. They won’t look at a railroad, an oil company, a steel company. They’re only going to look at companies growing 40% a year. They won’t look at turnarounds. Or companies with unions.” Thus, individual investors miss great opportunities in overlooked industries or unjustly beaten down companies to chase hot growth stocks.
“But my system for over 30 years has been this: When stocks are attractive, you buy them. Sure, they can go lower. I’ve bought stocks at $12 that went to $2, but then they later went to $30.” Peter Lynch
“You have to really be agnostic” to pick winners and to invest in a company poised for a rebound, according to Lynch.
“Stocks aren’t lottery tickets. Behind every stock is a company. If the company does well, over time the stocks do well.” Peter Lynch
Peter Lynch’s eight simple investing principles for long term investors are:
Know what you own – Few individual investors actually do their research. And, almost every investor is guilty of jumping into a stock they know very little about.
It’s futile to predict the economy and interest rates (so don’t waste time trying) – The U.S. economy is an extraordinarily complex system. Trying to time the market is futile. Set up a financial plan that allocates your assets based on your risk tolerance, so that you can sleep at night.
You have plenty of time to identify and recognize exceptional companies – You don’t need to immediately jump into the hot stock. There’s plenty of time to do your research first.
Avoid long shots – Lynch states that he was 0-for-25 in investing in companies that had no revenue but a great story. Make sure the risk-reward trade-off on an unproven company is worth it.
Good management is very important; good businesses matter more – “Go for a business that any idiot can run – because sooner or later, any idiot is probably going to run it.”
Be flexible and humble, and learn from mistakes – “In this business, if you’re good, you’re right six times out of 10. You’re never going to be right nine times out of 10.” You’re going to be wrong. Diversification and the ability to honestly analyze your mistakes are your best tools to minimize the damage.
Before you make a purchase, you should be able to explain why you’re buying – You should be able to explain your thesis in three sentences or less. And in terms an 11-year-old could understand. Once this simply stated thesis starts breaking down, it’s time to sell.
There’s always something to worry about. – There are plenty of world events for investors to fear, but past investors have survived a Great Depression, 911 terrorist attack, two world wars, an oil crisis, 2007 financial crisis, and double-digit inflation. Always remember, if your worst fears come true, there’ll be a heck of a lot more to worry about than some stock market losses.
Finally, in the words of Peter Lynch…”You can lose money in the short term, but you need the long term to make money.”
“Happiness is not something ready made. It comes from your own actions.” Dalai Lama
Emotional well-being is defined as the ability to successfully handle life’s stresses, adapt to difficult times, and thrive. Emotional well-being is also good for your overall health.
Studies have consistently shown that emotional well and happiest people are those who seek meaning and purpose, practice gratitude, and build strong close relationships, as opposed to seeking immediate gratification or pleasure, states Tchiki Davis, Ph.D., Founder, Berkeley Well-Being Institute, and well-being expert. To find fulfillment, you must uncover your true hopes, ambitions, dreams and ideas, then make your actions match these ideals.
Yet, no matter how perfectly you conduct your life, you won’t always be joyful and peaceful. The happiest and emotionally well individuals will experience stormy and uncertain periods.
Happiness and Emotional Wellness allows us to thrive, solve the problems we confront in our lives and maintain a strong sense of hope.
What determines happiness is due to personality and thoughts and behaviors that can be changed. Thus, you can learn how to be happy — or at least happier.
Although you may have thought, as many people do, that happiness comes from being born wealthy or beautiful or living a stress-free life, the reality is that people who have wealth, beauty or less stress are not happier on average than those who don’t enjoy those things.
People who are happy seem to intuitively know that their happiness is the sum of their life choices. They know that choices, thoughts and actions can influence their level of happiness. You can enhance your happiness by:
Investing in relationships – Surround yourself with happy people. Being around people who are content buoys your own mood. And by being happy yourself, you give something back to those around you.
Expressing gratitude – Gratitude is more than saying thank you. It’s a sense of wonder, appreciation and, yes, thankfulness for life. Think about what you’re grateful for before you go to sleep and when you wake up in the morning.
Cultivating optimism – Develop the habit of seeing the positive side of things. Remember that what is right about you almost always is more than what is wrong.
Finding your purpose – People who strive to meet a goal or fulfill a mission are happier than those who don’t have such aspirations. Having a goal provides a sense of purpose, bolsters self-esteem and brings people together. Research studies suggest that relationships provide the strongest meaning and purpose to your life. So cultivate meaningful relationships.
Living in the moment – Don’t postpone joy waiting for a day when your life is less busy or less stressful. That day may never come. Instead, look for opportunities to savor the small pleasures of everyday life. Focus on the positives in the present moment, instead of dwelling on the past or worrying about the future.
Spending time with supportive friends or family, cultivating a grateful attitude and an optimistic outlook, focusing on your purpose, and living in the present can help you take steps toward being happier.
Additionally, practicing gratitude is a great way to boost emotional wellness. First, it feels good because we feel happier to have good things in our lives. Second, it helps improve our relationships when we share our gratitude with others. They see that we value them and it makes our relationships stronger. This makes gratitude a double whammy for our emotional wellness. Start by writing a gratitude list or gratitude notes to people who you are grateful for.
Good friends are good for your health.
It’s never too late to build new friendships or reconnect with old friends. Investing time in making friends and strengthening your friendships can pay off in better health and a brighter outlook for years to come.
Developing and maintaining healthy friendships involves give-and-take. Sometimes you’re the one giving support, and other times you’re on the receiving end. Letting friends know you care about them and appreciate them can help strengthen your bond. It’s as important for you to be a good friend as it is to surround yourself with good friends.
Friends play a significant role in promoting your overall health.
Friends can help you celebrate good times and provide support during bad times. Friends prevent loneliness and give you a chance to offer needed companionship, too. Friends can also:
Increase your sense of belonging and purpose
Boost your happiness and reduce your stress
Improve your self-confidence and self-worth
Help you cope with traumas, such as divorce, serious illness, job loss or the death of a loved one
Encourage you to change or avoid unhealthy lifestyle habits, such as excessive drinking or lack of exercise
Friends play a significant role in promoting your overall health. Adults with strong social support have a reduced risk of many significant health problems, including depression, high blood pressure and an unhealthy body mass index (BMI), according to Mayo Clinic. Studies have even found that older adults with a rich social life are likely to live longer than their peers with fewer connections.
“When it comes to investing, we have met the enemy, and it’s us.” Kiplinger Magazine
Excited by profit and terrified of loss, we let our emotions and minds trick us into making terrible investing decisions, writes Katherine Reynolds Lewis of Kiplinger Magazine.
Most individual investors allow their emotions to dictate their investment decisions. Effectively, there are two types of emotional reactions the average investor can experience:
Fear of Missing Out (FOMO). These investors will chase stocks that appear to be doing well, for fear of missing out on making money. This leads to speculation without regard for the underlying investment strategy. Investors can’t afford to get caught up in the “next big craze,” or they might be left holding valueless stocks when the craze subsides.
Fear of Missing Out (FOMO) can lead to speculative decision-making in emerging areas that are not yet established.
Fear of Losing Everything (FOLE) is a more powerful emotion that comes from the fear that they will lose all of their investment.
Acording to a 2021 Dalbar study of investor behavior, Dalbar found that individual fund investors consistently underperformed the market over the 20 years ending Dec. 31, 2020, generating a 5.96% average annualized return compared with 7.43% for the S&P 500 and 8.29% for the Global Equity Index 100.
“As humans, we’re wired to act opposite to our interests,” says Sunit Bhalla, a certified financial planner in Fort Collins, Colo. “We should be selling high and buying low, but our mind is telling us to buy when things are high and sell when they’re going down. It’s the classic fear-versus- greed fight we have in our brains.”
Avoiding these seven “emotional and behaviorial” investing traps will allow you to make rational investments.
Fear of Missing Out – Like sheep, investors often take their cues from other investors and sometimes follow one another right over a market cliff. This herd mentality stems from a fear of missing out. The remedy: By the time you invest in whatever is trending, it’s too late because professional investors trade the instant that news breaks. Individual investors should buy and sell based on the fundamentals of an investment, not the hype.
Overconfidence – Some investors tend to overestimate their abilities. They believe they know better than everyone else about what the market is going to do next, says Aradhana Kejriwal, chartered financial analyst and founder of Practical Investment Consulting in Atlanta. “We want to believe we know the future. Our brains crave certainty.” The remedy: To combat overconfidence, build in a delay before you buy or sell an investment so that the decision is made rationally.
Living in an Echo Chamber – Overconfidence sometimes goes hand in hand with confirmation bias, which is the tendency to seek out only information that confirms our beliefs. If we think an asset holds promise for riches, news about people making money sticks in our minds more than negative news, which we tend to dismiss. The remedy: To counteract this bias, actively seek out information that contradicts your thesis.
Loss Aversion – Our brains feel pain more strongly than they experience pleasure. As a result, we tend to act more irrationally to avoid losses than we do to pursue gains. The remedy: Stock market losses, however, are inevitable.If seeing the losses pile up in a down market is too hard for you, simply don’t look. Have faith in your long-term investing strategy, and check your portfolio less often.
No Patience for Sitting Idly By – As humans, we’re wired for action. That compulsion to act is known as action bias, and it’s one reason individual investors can’t outperform the market — we tend to trade too often. Doing so not only incurs trading fees and commissions, which eat into returns, but more often than not, we realize losses and miss out on potential gains. The remedy: Investors need to play the long game. Resist trading just for the sake of making a decision, and just buy and hold instead.
Gambler’s Fallacy – “This is the tendency to overweight the probability of an event because it hasn’t recently occurred,” says Vicki Bogan, associate professor at Cornell University. Over time, the probability of equities having an up year or a down year is about the same, regardless of the previous year’s performance. That’s true for individual stocks as well. The remedy: When stocks go down, don’t just assume they’ll come back up. “You should be doing some analysis to see what’s going on,” Bogan says.
Recency Bias – Past performance is no guarantee of future results. Yet, our minds tell us something different. “Most people think what has happened recently will continue to happen,” Bhalla says. It’s why investors will plow more money into a soaring stock market, when in fact they should be selling at least some of those appreciated shares. And if markets plummet, our brains tell us to run for the exits instead of buying when share prices are down.The remedy: You can combat this impulse by creating a solid, balanced portfolio and rebalancing it every six months. That way, you sell the assets that have climbed and buy the ones that have fallen. “It forces us to act opposite to what our minds are telling us,” he says.
It is wise to always keep in mind that the market is volatile as a result of investors’ emotions and behaviors, and thus does not move logically.
“The kind of people that all teams need are people who are humble, hungry, and smart: humble being little ego, focusing more on their teammates than on themselves. Hungry, meaning they have a strong work ethic, are determined to get things done, and contribute any way they can. Smart, meaning not intellectually smart but inner personally smart.” Patrick Lencioni
Patrick Lencioni thinks it is time to change the way people prepare for success. Drawing from his book, The Ideal Team Player, Lencioni makes the compelling case that the key to success in an increasingly team-oriented world are Three Simple Virtues:
Humility – think about others before themselves…putting others before yourselves.
Hunger – need a innate sense of hunger to get things done.
Smart – high emotional intelligence…how we use our smarts to get the best out of others (people smarts).
Whether you’re a senior executive or a high school coach, focusing on these deceptively simple virtues can radically improve your personal and professional effectiveness and fulfillment.
The Concept
An ideal team player embodies three virtues: humility, hunger and people smarts. The power this combination yields drastically accelerates and improves the process of building high-performing teams.
HUMBLE — Ideal team players are humble. They lack excessive ego or concerns about status. They are quick to point out the contributions of others and slow to seek recognition for their own. They share credit, emphasize team over self, and define success collectively rather than individually.
HUNGRY — Ideal team players are hungry. They are always looking for more—more things to do, more to learn, more responsibility. Hungry people rarely have to be pushed by a manager to work harder because they are self-motivated and diligent. They are constantly thinking about the next step and the next opportunity.
SMART — Ideal team players are smart. They are emotionally intelligent and have common sense about people. They tend to know what is happening in a group situation and how to effectively deal with others. They have good judgment and intuition around the subtleties of group dynamics and the impact of their words and actions.
What makes this model so powerful and unique is the required combination of all three attributes together, according to Lencioni. If even one attribute is missing in a team member, teamwork becomes significantly more difficult and sometimes even impossible.
Research shows that intermittent fasting is a way to manage your weight and prevent several forms of chronic diseases.
Scientific studies are showing that intermittent fasting may help reverse chronic unhealthy trends of obesity, type 2 diabetes, heart disease and other illnesses.
Intermittent fasting is all about when you eat.
With intermittent fasting, you only eat during a specific time. Fasting for a certain number of hours each day or eating just one meal a couple days a week, can help your body burn fat. And scientific evidence points to some health benefits, as well.
Intermittent fasting is based on choosing regular time periods to eat and fast. For instance, you eat only during an eight-hour period each day and fast for the remaining sixteen hours. Or you might choose to eat only one meal a day two days a week.
After hours without food, the body exhausts its sugar stores and starts burning fat. This is referred to as metabolic switching.
Intermittent fasting works by prolonging the period when your body has burned through the glycemic calories consumed from your last meal and begins burning fat. Glycemic is basically the presence of glucose (or sugar) in your blood.
Intermittent Fasting Benefits
Research shows that the intermittent fasting periods do more than burn fat, explains Mark Mattson, Ph.D., Johns Hopkins neuroscientist, who has studied intermittent fasting for 25 years. “When changes occur with this metabolic switch, it affects the body and brain.”
One of Mattson’s studies published in the New England Journal of Medicine revealed data about a range of health benefits associated with the practice. These include a longer life, a leaner body and a sharper mind.
“Many things happen during intermittent fasting that can protect organs against chronic diseases like type 2 diabetes, heart disease, age-related neurodegenerative disorders, even inflammatory bowel disease and many cancers,” he says.
Here are some intermittent fasting benefits research has revealed so far:
Thinking and memory. Studies discovered that intermittent fasting boosts working memory in animals and verbal memory in adult humans.
Heart health. Intermittent fasting improved blood pressure and resting heart rates as well as other heart-related measurements.
Physical performance. Young men who fasted for 16 hours showed fat loss while maintaining muscle mass. Mice who were fed on alternate days showed better endurance in running.
Diabetes and obesity. In animal studies, intermittent fasting prevented obesity. And in six brief studies, obese adult humans lost weight through intermittent fasting.
Tissue health. In animals, intermittent fasting reduced tissue damage in surgery and improved results.
Autophagy and Anti-Aging
After 16 to 18 hours of fasting, you should be in full ketosis. Your liver begins converting your fat stores into ketone bodies — bundles of fuel that power your muscles, heart, and brain.
If you can do intermittent fasting for 16-18 hours a day, you’ll burn through body fat and fill up quickly when you break your fast, which makes it easy to stay in a calorie deficit and lose weight.
After a full-day fast, your body goes into repair mode. It begins recycling old or damaged cells and reducing inflammation. If you’re looking for anti-aging or anti-inflammatory benefits, a 24-hour or greater timeframe fast is required. .
When your body is under mild stress (such as exercise or an extended fast), your cells respond by becoming more efficient.
Intermittent fasting is a valuable and an effective tool to improve your mental and physical health.
