There are two broad approaches to investing in the stock market. One approach says hire the best and brightest financial analysts to study companies and buy the stocks with the most future potential. We call that active management since there is often constant buying and selling going on. The other approach, diametrically opposed to active management, says it’s impossible to tell which stocks have the most future potential. So rather than spend a lot of time and money researching individual stocks, why not buy all stocks. That approach, often termed passive investing, is basically what happens in an index fund. An S&P 500 index fund, for example, buys all 500 stocks in the S&P 500 with no effort to separate the winners from the losers. Continue Reading…
Socks Go in the Sock Drawer!
It’s pretty frustrating to get dressed in the morning and your socks are in the wrong drawer. Or they don’t match each other. Or they are not paired up at all. And of course there’s that individual sock with no match: the odd sock. I’ve got some odd socks I’ve had several years — I figure any day the mate will turn up. Getting dressed in the morning would be more efficient if my sock drawer was better organized. Continue Reading…