What’s been on your reading list? Here’s what’s been on the SigFig HQ coffee table.
The 2013 Nobel Memorial Prize for Economics.
Congrats Eugene Fama, Robert Shiller, and Lars Peter Hansen! Past prizes may have focused on esoteric economics tools, but this is one Nobel everyday investors can celebrate.
Why? Tim Hartford sums it up:
“At last, they’ve given out a Nobel memorial prize in economics for something that could make money for you and me.” In a nutshell, it’s really hard for people to pick stocks and beat the market consistently. Be skeptical of those who tell you they can — especially “expert” money managers. (For more: The Economist.)
SgFgTrivia: our resident finance professor once owned a fish he lovingly named “Gene”.
Warren Buffett gives personal finance advice.
Like lots of people, we’re big fans of the Sage of Omaha (Berkshire Hathaway just reported a surge in profit). So when Warren Buffett gives USA Today stock tips, we listen! The whole piece is worth a read.
To summarize, Mr Buffett has 3 Don’ts:
1. Don’t try to time the market
2. Don’t try to mimic high-frequency traders
3. Don’t pay too much in fees and expenses
… and 1 Big Do: “Buy an index fund, preferably over time, so you end up owning good businesses at a reasonable average price”.
In our mission to help people invest better, we combed through mountains of data. Analyzing 3 years of anonymized investor trading data, we have found that among our users, 2 out of 3 can cut their trading fees by 50% or more, and 2 out of 3 can cut their fund fees by 80% or more. Many have already done so just by switching to an index fund.
In short, we wholeheartedly agree with Mr Buffett. These mistakes cost everyday investors far too much.
The big blue bird takes flight November 7th! The internet is abuzz and pundits are atweet. Are you taking part on Twitter’s IPO day? If so, a few observations based on last year’s highly-prized Facebook and LinkedIn IPOs. Analyzing anonymized transactions from SigFig users, we found:
- Traders who tried to flip (buy and sell on IPO day) had modest gains. FB flippers realized a +0.7% average gain. LNKD flippers realized a +1.1% average gain.
- Few IPO day buyers manage to buy at opening prices. Many bought at higher prices. FB IPO buyers bought at $39.72 on average ($38 offering price, closed at $32). LNKD IPO buyers bought at $96.97 on average ($45 offering price, closed at $94).
- Academic studies have found that buying on IPOs makes poor investments.
- And lastly, make sure you trade the correct ticker!