investment management – Page 2 – The Agnostic Investor

Happy Independence Day!

As we complete our third year in business, I would like to take this opportunity to thank our clients, family and friends. It has been a difficult road but as we continue to meet the challenges we face daily, the aureate beacon of CWM continues to brighten.

July 23rd marks the third anniversary of our Grand Opening Celebration. The first release of Pythia, our financial management tool will begin testing before months end. Pythia will offer automated investment management and financial planning, as well as an educational element or Temple.

Do you believe in opportunity costs/risk?

According to Merriam-Webster, opportunity cost is the added cost of using resources (as for production or speculative investment) that is the difference between the actual value resulting from such use and that of an alternative (as another use of the same resources or an investment of equal risk but greater return).

Opportunity Cost = greater rate of return – your rate of return
(investments of equal risk over some period of time)

“…reference point thinking leads people to give opportunity costs less weight than out-of-pocket costs of the same magnitude (Shefrin, 2002).”

Opportunity risk is generally defined as the probability of loss if resources are committed to an investment and a more lucrative opportunity presents itself.

Is opportunity risk a measurement of regret exposure?

Five Books That May be Ideal for the Self Directed Investor

Ubiquity – Why Catastrophes Happen by Mark Buchanan

Beyond Greed and Fear – Understanding Behavioral Finance and the Psychology of Investing by Hersh Shefrin

The Art of Contrary Thinking by Humphrey B. Neill

Thinking Fast and Slow by Daniel Kahneman

Nudge – Improving Decisions About Health, Wealth and Happiness by Richard H. Thaler & Cass R. Sunstein