• How can amnesia be good for investing?  Your students might enjoy this article from Daily Finance and what it teaches us about holding stocks for the long-term.

“An employee who recently joined his firm told him that Fidelity [a large brokerage firm] had studied which customer investing accounts performed the best: They were the ones held by people who had forgotten they even had Fidelity accounts, and so did no buying or selling from them.”

• Who’s owns stocks and benefitting from the bull market (CNN)?  Provides a deeper look at the demographics and socioeconomic status of shareholders.

“Only 49% of Americans have any money in stocks at all, according to the latest data from the Federal Reserve. That figure includes everyone invested in retirement funds (think pensions and 401(k) plans) as well as those who take the time to buy specific stocks such asApple (AAPL, Tech30), Ford (F) and Facebook (FB, Tech30).”

• How to teach teens about investing (WSJ):  Disagreement over how best to teach:  stock market game vs. index funds.  Ends article with three key lessons to teach students about investing:

“First, no one has been able to predict stock-market moves with any consistency. Second, few things are as dangerous to your wealth as the latest glamorous “growth” stock. And third, successful investing only works over the long term.”

• Understanding relationship between facts, belief and actions are key to so many financial decisions (NY Times):

“Let’s go back to the idea of beating the market. I know of no study that contradicts the truth of the high improbability of doing so.

Assume we know this fact and do believe it’s very unlikely we’ll beat the market. Why, then, do so many of us act contrary to what we know and believe? Do we keep betting on individual stocks because we genuinely think we’re the exception? Or do we keep jumping from stock to stock because we like the way it makes us feel?

Asking these questions may well lead to uncomfortable answers about our behavior. But those answers are revealing too. Understanding that we’re doing something because it feels fun, for example, may be a real eye-opener; your actions don’t align with what you know and believe because you enjoy the excitement of tracking stocks and trying to predict what will happen next in the market.”

• On the subject of active vs. passive investment management, this Barrons blog post notes that active management isn’t going away:

“However, the problems with active management are nothing new, and yet the strategy persists. It may be to individual hubris—most investors may not be able to pick the right stocks or manager, but most investors also consider themselves smarter than the pack—or the chance to advantage of volatility that makes active management attractive. No matter the case, active management likely isn’t fading to black in the near future.”

• Good advice for young investors here (USA Today):  Read, pay off high interest rate debts first, sign up for brokerage account, diversify, start early.  My only beef on the article is the focus on “picking the next great stock.”  Hard to do, expensive to try and doesn’t mention index funds which are lower cost and in long-term beat active management.

“Most college students are concerned about studying for exams, finding a flexible part-time job and lining up some fun extracurricular activities. But there’s always a few students stuck off in a corner of the library, trying to pick the next great stock.  If you happen to be one of those students interested in learning more about investing, these five tips are for you.”

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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