behavioral finance

A chart showing a trend-following strategy and momentum investing over time across market cycles
Market History

Trend-Following and Momentum Have a Century of Data Behind Them — So Why Doesn’t That Settle the Debate?

A reader of the finance blog A Wealth of Common Sense recently asked a fair question: is there real evidence that trend-following or momentum works for someone like them, not just for hedge funds with access to futures markets? It’s a good question because it separates two things that often get blurred together — whether a pattern in historical prices is real, and whether that pattern is something an ordinary investor should build into a portfolio. Those are not the same question, and the answer to the first does not automatically answer the second.

Analytical comparison of lump sum investing and dollar-cost averaging for a large rollover portfolio
Investment Myths

The $500,000 Question Isn’t Timing the Market — It’s Timing Your Nerves

A rollover check for half a million dollars does not arrive with instructions. It arrives with a decision: put it all to work now, or feed it in gradually and hope the market cooperates. Most explanations of this choice treat it as a math problem with a correct answer. It isn’t. The real question is which approach gives you the best odds of still being invested — calmly, without a sleepless month of second-guessing — five, ten, or twenty years from now.

A notebook beside a calculator and stock charts, illustrating the Buffett-style focus on the boring investing habits behind strong decisions
Investor Behavior

Why Buffett’s “Boring” Investing Isn’t About Boring Stocks at All

Warren Buffett has spent decades buying businesses that make people yawn — insurance, railroads, ketchup, candy. The popular takeaway is that boring wins and exciting loses, so investors should hunt for dull tickers and avoid anything with a story attached. That reading is too simple, and it misses the actual mechanism at work: the discipline that keeps an investor from mistaking a compelling narrative for a good business.

A savings account statement beside cash and rising price tags, illustrating the hidden cost of cash over time
Investor Behavior

When “Safe” Cash Is Quietly Losing You Money

Ask most savers why they keep a large balance in a savings account rather than in the stock market, and the answer usually comes down to a single word: safety. Cash cannot fall to zero overnight, it is there when you need it, and it never sends you an alarming statement after a bad month for shares. But that comfort has a cost that rarely shows up on any statement — and according to Vanguard’s head of behavioural economics research, Andy Reed, it is a cost the UK is paying on a very large scale.

A laptop displaying a robo-advisor portfolio dashboard beside market charts, illustrating that a robo-advisor does not remove investment risk.
Investment Myths

The Robo-Advisor Myth: Why “Set It and Forget It” Isn’t the Same as “Safer”

A robo-advisor promises something appealing: hand over your investing decisions to an algorithm, and let discipline replace guesswork. But discipline is not the same as protection. Automating the mechanics of investing — rebalancing, fund selection, sometimes tax optimization — changes how a portfolio is managed, not whether it can lose money. Before comparing management fees or reading “best overall” rankings, it helps to separate what these platforms genuinely improve from what they simply repackage.

A surviving spouse reviewing retirement paperwork, illustrating the widow's penalty and higher taxes after a household changes size
Investor Behavior

When a Smaller Household Can Mean a Bigger Tax Bill

Losing a spouse is among the most disorienting experiences a person can face. In the weeks and months that follow, surviving spouses must navigate estate paperwork, benefit decisions, and financial accounts — all while grieving. What many do not anticipate is a tax surprise waiting quietly on the horizon: the same retirement income, or even a reduced version of it, can end up being taxed more heavily once a person files alone.

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