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December 2, 2014

Jonathan Tobin: Defending the Right to a Jewish State

Heather Hale: Compliment your kids without giving them big heads

Megan Shauri: 10 ways you are ruining your own happiness

Carolyn Bigda: 8 Best Dividend Stocks for 2015

Kiplinger's Personal Finance editors: 7 Things You Didn't Know About Paying Off Student Loans

Samantha Olson: The Crucial Mistake 55% Of Parents Are Making At Their Baby's Bedtime

Densie Well, Ph.D., R.D. Open your eyes to yellow vegetables

The Kosher Gourmet by Megan Gordon With its colorful cache of purples and oranges and reds, COLLARD GREEN SLAW is a marvelous mood booster --- not to mention just downright delish
April 18, 2014

Rabbi Yonason Goldson: Clarifying one of the greatest philosophical conundrums in theology

Caroline B. Glick: The disappearance of US will

Megan Wallgren: 10 things I've learned from my teenagers

Lizette Borreli: Green Tea Boosts Brain Power, May Help Treat Dementia

John Ericson: Trying hard to be 'positive' but never succeeding? Blame Your Brain

The Kosher Gourmet by Julie Rothman Almondy, flourless torta del re (Italian king's cake), has royal roots, is simple to make, . . . but devour it because it's simply delicious

April 14, 2014

Rabbi Dr Naftali Brawer: Passover frees us from the tyranny of time

Greg Crosby: Passing Over Religion

Eric Schulzke: First degree: How America really recovered from a murder epidemic

Georgia Lee: When love is not enough: Teaching your kids about the realities of adult relationships

Cameron Huddleston: Freebies for Your Lawn and Garden

Gordon Pape: How you can tell if your financial adviser is setting you up for potential ruin

Dana Dovey: Up to 500,000 people die each year from hepatitis C-related liver disease. New Treatment Has Over 90% Success Rate

Justin Caba: Eating Watermelon Can Help Control High Blood Pressure

The Kosher Gourmet by Joshua E. London and Lou Marmon Don't dare pass over these Pesach picks for Manischewitz!

April 11, 2014

Rabbi Hillel Goldberg: Silence is much more than golden

Caroline B. Glick: Forgetting freedom at Passover

Susan Swann: How to value a child for who he is, not just what he does

Cameron Huddleston: 7 Financial Tasks You Should Tackle Right Now

Sandra Block and Lisa Gerstner: How to Profit From Your Passion

Susan Scutti: A Simple Blood Test Might Soon Diagnose Cancer

Chris Weller: Have A Slow Metabolism? Let Science Speed It Up For You

The Kosher Gourmet by Diane Rossen Worthington Whitefish Terrine: A French take on gefilte fish

April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review

Warning: Don't waste your capital being fooled by profit prophets

By Morgan Housel





Ride the market rollercoaster, sure. But here's why you'll never know what will happen next


JewishWorldReview.com | You may have noticed something about the market this year: It's gone up. A lot.

Not just in percentage terms -- the Dow Jones is up about 11 percent -- but in the number of trading days that finished higher.

There have been 22,104 trading days since 1928. During that period, the market closed higher on 11,560 days, or about 52 percent of the time.

This year, we're pulling far away from that average. The S&P 500 has increased in 37 of the 60 trading sessions so far this year, or 62 percent of the time. If the trend holds for the rest of the year, 2013 will have the most number of up days in history.

Those are the numbers. What do they tell us? Surprisingly, very little.


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Before I dug into the data, I figured a high percentage of up days would either signal high current returns, or it would be correlated with low future returns, since a reversion to the mean meant the market was due to fall on a high number of days going forward.

But neither is entirely true.

Since 1928, the percentage of days the stock market rises is positively correlated with market returns -- in other words, the more days the market rises, the higher annual returns are likely to be -- but not by much. The correlation between the two is 0.4 (zero would be no correlation, while 1 would be perfect correlation). And the number of up days in one year tells us virtually nothing at all about what returns will be in the following year (a correlation of -0.07).

Take a few examples. In 2008, the market rose on 50.6 percent of days -- more than half. What'd the market do? It fell 37 percent. In 1991, the market rose on 49.4 percent of days. Yet the market surged 31 percent.

In 1933, the market rose 49.8 percent of days, and finished the year up a whopping 56.8 percent. In 1957 it rose a staggering 62 percent of days -- so far the most on record -- yet finished the year down 9.3 percent.

There are two takeaways from this.

The obvious lesson is that the biggest market moves take place on a small minority of days. Big market rises and big market sell-offs aren't usually the result of slow, grinding moves. They tend to happen in short, sharp bursts. While the market rose on more than half of trading days in 2008, it logged 11 days of declines of 5 percent or larger. The majority of the year's decline occurred on a very small number of days, which is entirely common.

The same thing happens on the way up, which is why so many investors who bail out of the market during a crash miss the inevitable rebound. Those who sold when the Dow was at 8,000 felt great about themselves when it hit 6,000. But when ... snap ... it was back above 10,000 within months, they were left burned. Apple increased more than 6,000 percent in the last decade, but declined on 48 percent of all trading days. When the big moves happen on a small number of days, timing the market means you have be precisely right, not just mostly right. And since no one can be precisely right, the results of active market-timers are entirely predictable: Most fail.

The second takeaway is a lesson in volatility. Since 1928, the S&P 500 increased from 18 to 1,560, or 86-fold. Yet the market declined on 48 percent of all trading days. In 1999, one of the best years ever for the market, stocks fell on just about half of all trading days. Think of it that way, and it's amazing that the financial media is so infatuated with market updates. What does it mean when the market falls? Nothing. Nothing at all. It doesn't signal a downturn, or a correction, consumers losing confidence, or traders getting nervous. It's just something markets do about every other day.

(Morgan Housel has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple.)

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Morgan Housel, a columnist at The Motley Fool, is a two-time winner, Best in Business award, Society of American Business Editors and Writers and Best in Business 2012, Columbia Journalism Review.


Previously:


25 important things to remember as an investor

New paradigm for both drivers and car companies

Biases that make you a bad investor

Nine financial rules you should never forget

Gaining from financial destruction

How to read financial news

Housing: Partying like it's 1925

A rebuttal to student loan horror stories

CONGRATULATIONS: We just saved half a trillion dollars

End this crazy tax: It will boost the economy

Medicare: A dangerously good deal

Economic future looks bright

The Biggest Threat to Your Portfolio (It's Not What You Think)

Bond Market Bull Run dead at 30



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