Archive for March, 2014

Past performance is not a guarantee of future returns. This is such an important piece of information the SEC requires that a similar statement accompany any discussion of performance. So why do so many investors still use historical performance data to pick funds?
Past performance is a comforting lazy validation of how a fund’s strategy worked in the past—a favorite of performance chasers who end up missing out on the best of the market and frequently missing their investment goals.

Chasing performance is irrational because it seeks only to beat the market. You don’t need to beat the market, you need to achieve your financial goals. Pursuing greater rewards brings greater risk that you won’t achieve your objective. You can’t control or predict the market. You CAN control how much you are saving, your portfolio allocation and following a disciplined
investment strategy.

While not as easy as looking at a fund’s past performance, how you think about and understand risk, how long you have to achieve your goals and what specific role a fund will play within your portfolio is the key information that guides good decisions. Understanding how a fund’s fees and expenses impacts your goals is WAY more important than past performance because these will
definitely occur in the future.

Looking at past performance to predict future returns is like your friend who dates online and hopes that tomorrow’s date didn’t post a ten year old photo.

Options are not that complicated and are greatly misunderstood by not only the general public but also by most investment advisors.  Options do not automatically equal risk.  Sure they can be used to play roulette with the markets but so can any stock.  How many people did you know that bought Apple when it hit $700 and seemed like it was only going up?  Where are those people now?

Options are no different. They are a powerful tool that can be used to reduce risk, increase income, and over all improve performance.  We encourage all of our clients to learn as much about options as possible so they can understand what we do.  We want everyone to be comfortable with our recommendations.

Here are some of our favorite options books:

Getting Started in Options by Michael C Thomsett
Options as a Strategic Investment by Lawrence G. McMillan
The Rookie’s Guide to Options by Mark D. Wolfinger
Profiting with Iron Condor Options by Michael Benklifa
Options Made Easy by Guy Cohen
The Bible of Options Strategies By Guy Cohen
Get Rich with Options by Lee Lowell
The Complete Guide to Option Selling by J. Cordier and M. Gross
Trading Option Greeks by Dan Passrelli
The Volatility Edge in Options Trading by Jeff Augen
Option Volatility & Pricing by Sheldon Natenber

General trading books, trading philosophy etc.:
Super Trader by Van K. Tharp
Trade Your Way to Financial Freedom by Van K. Tharp
Come Into My Trading Room by Alexander Elder
The Complete Trading for a Living by Alexander Elder
Trading in the Zone by Mark Douglas

If you would like further recommendations, please just connect with us.

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