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Insights



Second Hand News

Why doesn’t the media run more good news? One view is bad news sells. If people preferred good news, the media would supply it. But markets don’t see news as necessarily good or bad, rather in terms of what is already built into prices. One academic study appears to confirm the view that the apparent preponderance of bad news is as much due to demand as to supply, with participants more likely to select negative content regardless of their stated
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2,860 Reasons Why You Should Think About Firing Your Money Manager

Here is what we know about active management: Active Managment is expensive The average expense ratio of actively managed funds is 1.29% vs. an average of .80% for all passive funds. Active Management doesn’t consistently work well Over the last 5 years (2009 – 2013), only 39% of U.S. Equity funds and 29% of International funds outperformed their benchmarks.(2) In those rare instances when Active Management works, it rarely lasts Over the last five years (through March), only 2 out
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Optimism Bias Can Ruin Your Financial Life and Portfolio

Economist, actor and author Ben Stein provides a blueprint for many of the mistakes investors make in his book, “How to Really Ruin Your Financial Life and Portfolio.” Rather than dissuading investors from making these mistakes, he “encourages” investors to trade frequently, believe that we can successfully pick stocks, put our money into hedge funds, etc. “In your heart, as you very well know, you are legions ahead of those average investors, and even legions ahead of the indexes,” he
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How Fear Affects Our Decisions

We are all gripped by fear from time to time, but as persuasive as fear can be, it’s not a good investment guide. For example, few accidents are more horrifying than airplane crashes, yet the fear elicited by such disasters depresses stock beyond reason. Aviation disasters, on average, cause actual losses of less than $1 billion, but the loss in the value of stocks following a major plane crash averages more than $60 billion. Fear misleads us to avoid risk
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Unhealthy Attachments

Have you ever made yourself suffer through a bad movie because, having paid for the ticket, you felt you had to get your money’s worth? Some people treat investment the same way. Behavioral economists have a name for this tendency of people and organizations to stick with a losing strategy purely on the basis that they have put so much time and money into it already. It’s called the “sunk cost fallacy.” Let’s say a couple buy a property next
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“The IMF Threatens to Kill the U.S. Dollar” and other Fear Tactics

The dramatic title above echoes a trend of recent articles we’ve seen preying upon fears that the U.S. will lose its spot as the default global currency of choice. Recent announcements by the International Monetary Fund (IMF) have talked about potentially adding the Chinese yuan as an official reserve currency. The hot take from this has been to infer that it means the U.S. is getting knocked out of the top spot. However, many investors don’t realize that the IMF
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Why Are You Buying Gold?

I don’t know about you, but lately my newsfeed has been inundated with headlines and stories about gold. It seems many of these articles are written or sponsored by someone trying to get me to buy the shiny metal. Many make the same cliché claims about why gold is a wise investment: it provides safety during financial crises, it hedges against inflation and it creates wealth. Unfortunately, these claims encourage people to buy gold for the wrong reasons. Apocalyptic Protector?
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Buy Low Sell High – Easier Said Than Done

“Buy low sell high” – it sounds so simple when you say it out loud. Yet in practice it’s one of the hardest things to do if you let your emotions get in the way. We tend to view investing through a different lens than many other aspects of life. For example, if we were in Costco looking to buy a new TV, we wouldn’t get upset if a worker came up and knocked 20% off the price. In fact,
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DFA’s Disciplined Approach Earns It a Top Mark

As an Independent Registered Investment Advisor, we can choose any mutual fund company or companies to help us meet our clients’ needs. DFA’s disciplined, low cost, academic approach to responsible long term investing without conflicts of interests has been a perfect reflection of our beliefs for the past 12 years. Take note of the very important last bullet point highlighted below… DFA’s Disciplined Approach Earns It a Top Mark Each strategy the firm adopts must be economically sound and backed by substantial empirical
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More people need to practice Yoga. It’s better for the equity markets. :-))

An email I sent earlier today to our clients. Thought you might also benefit from this… I can understand how the recent equity market volatility and the media frenzy coverage can have many investors concerned. Also, don’t underestimate the amount of very poor investing advice you will most certainly receive over dinner and/or casual conversations from well intended and highly emotional yet ill informed family and friends during these moments. The good old suggestions to buy Gold or Silver, go to
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