With the S&P 500 up more than 60% from those dark days in March, it is becoming very easy to forget what it felt like to hold course in the face of what was clearly some very uncertain times. If you need a reminder, this video may help.

You may have already forgotten, but back then, there was an almost universal recognition that talking about risk in a "lifeboat drill" sort of way is completely different than EXPERIENCING IT.

Risk is funny that way: You can't understand it until you feel it.   More 

The other day, I was invited to give a talk to an investment club. Before my appearance, they sent me their club portfolio, making up of 20 stocks they have carefully chosen.

I took a look and was able to find out.

1. 18 out of the 20 are S&P 500 member stocks whose names appear regularly on CNBC and newspapers.
2. Only one foreign stock was among the 20. The company happened to have a big presence in Maryland where we live.   More 

When it comes to investing, people would probably pick greed as the most lethal of the Seven Deadly Sins. When there is euphoria or panic in the market, we know we are going to hear the old cliché that "investors are driven by greed and fear." When a Ponzi scheme is exposed or a financial services CEO gets a huge bonus, it's an even-money bet that some reporter will bring up the "greed is good" quote from Oliver Stone's "Wall Street." 

But there are other equally good candidates for the Deadliest Sin. Paul Wilmott in a recent interview with Bloomberg Radio said that he thought envy was the most dangerous of the seven sins:

Envy is a terrible thing. Anyone working this business sees people sitting next to them earning possibly many times what they are earning. And they want to have the same salaries, the same yachts, the same, eventually, private jets as other people.

Greed and envy are certainly the two clear contenders for the title. But in my opinion, the deadliest sin is far less obvious but much more insidious. It is pride.    More 

"It is a tale told by an idiot, full of sound and fury, signifying nothing."--Shakespeare

When the Dow passed 10,000 this week, the media, predictably, kicked up a big storm about it.

Even a relatively unknown like me got a call from a major newspaper asking me to comment whether this was a sign that the market would keep going up. I really struggled to answer. I knew that if I could spin a good story, the reporter would come back to me for more and more comments. Pretty soon, I would look like a stock market guru to my clients and prospects. This would surely be a win-win for me and the newspaper--if only I could bring myself to pretend.   More 

Why did correlations go to one?

My friend Carl Richards made an interesting observation in his last post:

Just when we need something to zig, they all zagged together!

Some people draw the conclusion that diversification no longer works. I strongly disagree. (Behaviorists would call that representative bias.)   More