Welcome to the July 2012 Carnival of Passive Investing, a monthly collection of the best and most intelligent Passive Investing strategy articles around the internet. Some people foolishly want to beat the market (want being the key word) but we just want to invest with it.
The purpose of the carnival is two-fold:
- To provide a forum to showcase articles and research in passive investing strategies (i.e. investing in ETFs, index mutual funds, etc. in such a way that one avoids employing active stock picking). By investing with the market, we are able to beat 70-80% of investment “professionals.”
- To create a community of passive investment bloggers to connect and share expertise.
The theme for this month’s carnival is: Behavior Gap sketches by Carl Richards. You can take a look at all of Carl’s sketches (he is creating new ones all the time) here. I’ve selected a few of my favorites to add some color and fun and under-the-radar learning experiences to the July 2012 carnival. I like Carl’s work for several reasons. One is that he focuses on the emotional side of the stock investing project and I view mastering the emotional side as the key to long-term success.
Another is that his sketches communicate to us without words. There are too many words written about investing! Seriously, we have heard the words so many times that we tune a lot of them out. Sketches can hit us with a familiar point in a fresh way. That can be a mighty good thing if the sketch is the thing that finally permits an important insight to sink through our thick skulls!
Here are this month’s Top Three Editor’s Picks:
Juicy Excerpt: Getting back to the word risk, it’s more complicated than reward because there are so many clever yet useless ways to define it. Some think of it as negative reward. Others think of it as how volatile the price of the particular investment can behave over time. Others perceive of it as the possibility of a loss of permanent capital over time. We think of risk in a simple manner. In case you haven’t been paying attention, we define risk as follows: How much money could I lose if I invested at the worst possible time before I recover my initial investment?