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Insights



The ABC’s of Investing

We should expect that education costs will likely be higher in the future than they are today. With school back in session in most of the country, many parents are likely thinking about how best to prepare for their children’s future college expenses. Now is a good time to sharpen one’s pencil for a few important lessons before heading back into the investing classroom to tackle the issue. THE CALCULUS OF PLANNING FOR FUTURE COLLEGE EXPENSES According to recent data
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The Tao of Wealth Management

The path to success in many areas of life is paved with continual hard work, intense activity, and a day-to-day focus on results. However, for many investors who adopt this approach to managing their wealth, that can be turned upside down. The Chinese philosophy of Taoism has a phrase for this: “wei wu-wei.” In English, this translates as “do without doing.” It means that in some areas of life, such as investing, greater activity does not necessarily translate into better results. In
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4 Charts Every Investor Should Know. #1: Let Markets Work For You

Sometimes a picture really can make things easier to understand. Many of the important ideas and concepts you need to know as a long-term investor don’t require lengthy explanations. They can be as simple as the four charts we’ll share in our upcoming Insights. Together, these charts illustrate foundational principles of investing such as focusing on the long term, diversification, and not letting emotions compromise your portfolio. Hypothetical value of $100 invested at the beginning of 1972 and kept invested
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What You Pay, What You Get: Connecting Price and Expected Returns

It has been more than 50 years since the idea of stock prices containing all relevant information was put forth. Information might come in the form of data from a company’s financial statements, news about a new product, a change in the regulatory environment, or simply a shift of investors’ tastes and preferences toward owning different investments. Information is incorporated into security prices through the buying and selling process. While fair prices may not depend on a certain level of
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Tuning Out the Noise

For investors, it can be easy to feel overwhelmed by the relentless stream of news about markets. Being bombarded with data and headlines presented as impactful to your financial well-being can evoke strong emotional responses from even the most experienced investors. Headlines from the ”lost decade”1 can help illustrate several periods that may have led market participants to question their approach. May 1999: Dow Jones Industrial Average Closes Above 11,000 for the First Time March 2000: Nasdaq Stock Exchange Index
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E+R=O, a Formula for Success

Combining an enduring investment philosophy with a simple formula that helps maintain investment discipline can increase the odds of having a positive financial experience. “The important thing about an investment philosophy is that you have one you can stick with.” David Booth, DFA Founder and Executive Chairman AN ENDURING INVESTMENT PHILOSOPHY Investing is a long-term endeavor. Indeed, people will spend decades pursuing their financial goals. But being an investor can be complicated, challenging, frustrating, and sometimes frightening. This is exactly
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2017: Another Bad Year for Expert Predictions

Every year, experts make bold pronouncements about the market and the economy. And every year, most of these predictions are wrong. If you had listened to the experts in 2017, you would have worried about global economic turmoil, a flat-to-disastrous stock market, even the end of the world. Instead, the U.S. economy continued to grow, most international markets were in positive territory, the S&P 500 returned 19% for the year, and the earth is still here. Gurufocus.com tracks the performance
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The Perils of Trying to Avoid the Worst Days in the Stock Market

Financial markets ebb and flow, and although it is natural to feel excited when stock markets do well and concerned when stock markets drop, it’s not usually a good idea to let those emotions dictate changes to your portfolio. As you can see below, the third-best one-day return occurred only two days after the worst one-day return (stock market crash of 1987). Most investors who bailed out of the markets in response to the crash would have missed a significant
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Sailing with the Tides

Embarking on a financial plan is like sailing around the world. The voyage won’t always go to plan, and there’ll be rough seas. But the odds of reaching your destination increase greatly if you are prepared, flexible, patient, and well-advised. A mistake many inexperienced sailors make is not having a plan at all. They embark without a clear sense of their destination. And once they do decide, they often find themselves lost at sea in the wrong boat with inadequate
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3 Common Investing Mistakes and How To Avoid Them

Information about how investors really make decisions is being researched all the time. However, work in the field of behavioral finance — some of which has won the Nobel Prize in economics — has identified several key ways in which our brains trick us into seeing the investment world one way, when in reality it is something quite different. These cognitive biases include: Anchoring bias. This reflects our tendency to latch our thinking onto a reference point that we are familiar with — even
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