If a rational investor believes that a passive strategy like indexing will usually outperform an active strategy like stock-picking, then why is it so difficult to stick to that passive strategy?
Read MoreWhere Are the Customers’ Yachts?
Warren Buffet reminded us of this story when he delivered an epic rant against Wall Street last weekend during the annual meeting of Berkshire Hathaway. Buffett unloaded what he called a “sermon" about hedge funds and investment consultants. Shortly put, Buffet thinks these players are usually a "huge minus" for anyone who follows their advice.
Read MoreThe Art of Sitting on Your Hands
2016 has started roughly for stocks all around the world. The chaos in China spread quickly to other continents and demonstrated brutally how interconnected the global markets are today. Oil is crashing to new lows and is currently trading close to $30. The S&P500 index had its worst-ever first week and went down roughly 10% from autumn highs. The noise is getting louder and louder and stock market investors are faced with a dilemma: should I sell everything or just sit on my hands and keep it cool.
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