Wall Street Approach vs Academic Approach

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The Story:

How should you approach the stock market? What are you basing your financial decisions on?

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The Show:

What’s the best approach to the market? If you think you’re picking a “good stock” what does that really mean? And how can you make a good choice? On today’s podcast, Don shares the academic approach to the market as well as a number of comparisons of how this can look in everyday life.

There’s a saying that goes, “Nothing is good or bad until you compare it to something else.” Are you comparing your investments to other investments? How does the housing market and the value it holds relate to what’s happening in the stock market?

What are your chances of beating the market with individual stocks? While there are always outliers to the rule, generally, it’s rare. Do you want to be constantly watching the stock market all day long? Whereas, if you own an index fund and you diversify, rebalance, maintain patience and discipline, then you can do other things with your life. Instead of picking individual stocks, likely you’ll have a better life and do better in the market.

Are you basing your plan on last year or the last five years? The academic approach to uncovering trends is not five years but 20, 40, 80 years. Are you instead relying on recency bias when making financial decisions? What happens if something goes awry?

Remember, retirement planning is more than just investing in stocks. Having a financial plan that will prepare and provide for your retirement is key. Do you have a plan that suits your needs and goals?

Listen to the entire episode or click on the timestamps below to skip ahead to a particular segment.

[1:43]Winter weather presses on.

[2:26] What’s the latest college “resource”?

[4:49] – Is buying “good stocks” still a speculation?

[7:07] – What’s the academic approach to the market?

[12:35] – How likely are you to beat the market?

[16:32] – What does Don think about the economy?

[18:34] – What is recency bias?


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Phone: (732) 784-2867

Email: don@donaldcash.com

Website: http://www.donaldcash.com/

About Don:

Donald W. Cash – CPA, CFP® is an independent advisor. Don began his career in 1985 as an accountant after graduating Rutgers University. In 1990 he entered the field of Estate Planning with a concentration in long term care planning. Don has been advising clients in the baby boomer and retirement market for 20 years. He has helped over 1,000 families with their planning needs. He advocates a holistic approach to Estate and Financial Planning as has relationships with other professionals including Attorneys, CPA’s, Mortgage Specialists, Insurance Specialists and Asset Managers. Don is married to Cathy and have 4 children, Carly, DJ, Nick and Tori. They live in Freehold, NJ.

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