Daniel Kahneman, whose death was announced this week, was one of the most influential psychologists of the modern era.

Born in Tel Aviv in 1934, Kahneman went to the US in 1958 to begin a doctorate in psychology before moving to Jerusalem in the early 1960s. He returned to North America in 1978 and was eventually appointed as a professor at Princeton University.

Graham Hand’s update last week, five months on from his cancer diagnosis, understandably struck a chord with readers. It wasn’t just his battle with brain cancer. It was also his revelations of struggling with not being able to work, and in some ways, of losing his personal identity.

It brought home that in debates about retirement or semi-retirement, there’s a lot of focus on the financial aspects: income, tax, estates, wills, superannuation, and the like. Less attention is paid to the psychological challenges of retirement, which can be even more demanding.

It’s my favorite time of year again: March Madness, the NCAA competition held each spring to determine the national champions of college basketball.

Many fans look forward to predicting who’s going to win the whole thing—what’s become known as “bracketology”—but not me. In my mind, March Madness is captivating because it’s completely unpredictable. What I love is witnessing an arena full of athletes trying their absolute hardest, working together to achieve a common goal. Watching college basketball provides clear evidence that we, as human beings, can do so much more together than we’re capable of on our own.

A lack of consistency by active fund managers in beating their respective indexes has been a constant theme of S&P Global's SPIVA U.S. Scorecard. With roots tracing back to 2002, this benchmarking series — formally titled the "S&P Indices Versus Active" report — semiannually reviews data tracking performance of active fund managers against their respective indexes.

A wealth of academic evidence — from Nobel laureates such as Eugene Fama and Harry Markowitz to William Sharpe and Merton Miller — warns that trying to time markets as a reaction to stock price fluctuations is a foolhardy endeavor.

Many people start out managing their own investments. But as their earnings and assets grow, their financial needs and challenges become more complex—and continuing to go it alone could prove costly in terms of investing miscues. Consider three common mistakes that can reduce returns and increase anxiety:

1. Trying to Time the Market

Investors may be tempted to cash out of the stock market to avoid a predicted downturn. But accurately forecasting the market’s direction to time when to buy and sell is a guessing game. Missing only a brief period of strong market performance can drastically affect your lifetime wealth.

James Gruber: Welcome, Kunal. What brings you to Australia?

Kunal Kapoor: Well, I've been accused of following Taylor Swift around, but that is definitely not the case. I'm here obviously because Morningstar has a large presence in Australia and just an opportunity to meet clients, checking on our teams, that kind of thing.

Gruber: You've come as markets reach record highs. Is it a time for investors to rejoice or to be cautious?

A podcast listener asks:

How do you both manage to produce podcasts every week, handle your jobs, write, read, and raise families without burning out? How do you maintain this balance? What strategies do you use to recharge yourselves? Personally, when I go on vacation, I completely disconnect from work, yet I’ve noticed you guys continue podcasting even during your vacations.

A reader asks:

I am 73, my wife is 58 and I have a 15 year old son. We own a small farm and house in Iowa. We also own three properties in Spain where we spend most of the year. We have no debt and are sitting on 2 million in cash, most of it is short term bills. I deal in vintage guitars and will keep doing it as long as I can. We have a great life and are careful with our spending. I would like to have a plan to create generational wealth. Is this possible? Any suggestions?

I love this question because it shows there is no single path to wealth-building.

When trying to outperform an index, many investors will try to trade between funds focused on different market segments and asset classes. But such an active investment approach isn't without costs. In fact, market timing can increase return volatility and add unnecessary uncertainty to the overall experience of investing in stocks and bonds. (See "Market Timing: More Evidence Why It Doesn't Work.")

Take a look at every recession we’ve been able to measure. How did the stock market respond? What can we learn from the past that is predictive of this moment? The answer is almost nothing.  

The early work of mathematician Louis Bachelier was barely recognized in his lifetime. But his doctoral thesis, The Theory of Speculation, influenced at least five Nobel Prize winners and is now acknowledged as one of the foundational works in the field of financial economics.

Even if you aren't interested in the stock market, it's impossible to escape it. Market movements are reported daily in newspapers, and hourly in the broadcast media. There are whole TV channels devoted to relaying the latest ups and downs, and which particular stocks are either beating or lagging the rest of the market. There are also thousands of commentators on social media trying to make sense of what's going on.

At this time of year, newspapers are full of suggestions about how to improve your investment returns over the next 12 months.

Although some of them are sensible, most of the tips on offer are really not very helpful. Many of them are simply based on what investments performed well or badly in 2023. But the best and worst performers in 2024 are unlikely to be the same as last year.

I heard an old Norm Macdonald joke once that went something like this:

An optimist looks at the glass as half full. A pessimist looks at the glass as half empty. I’m a pessimist and I look at the glass as half full…but I might have bowel cancer.

I am a glass-is-half-full guy but tend to lean optimistic unlike Norm. Just think about all that we’ve accomplished as a species.

Charlie Munger, who worked alongside Warren Buffett at Berkshire Hathaway for decades, died Nov. 28, 2023, at age 99, a little more than a month shy of his 100th birthday. Munger enlightened many investors about the value of practical, fundamentals-based investing—and he did so with a wry humor that will sorely be missed.

It’s easy for me to make a list of ideas from Warren Buffett and his partner Charlie Munger at Berkshire Hathaway that have influenced my own thinking and that of my fellow Buffett-heads here at Morningstar. The hard thing is confining the list to only 12. But here goes.

Recent retirees haven’t had an easy time of it lately. When stock and bond prices both plummeted in 2022, many retirees saw big dents in their portfolio values; a typical portfolio made up of 50% stocks and 50% bonds would have lost about 16% for the year. While market conditions have improved a bit in 2023, balanced portfolios have yet to win back all of their 2022 losses as of Oct. 31, 2023. Making matters worse, higher inflation has forced many retirees to take bigger withdrawals as their portfolio values have shrunk.

Compounding is one of the most powerful forces in the world. Just ask Albert Einstein, who’s said to have called it the “eighth wonder.” The seemingly small decisions we make every day gain power over time. That’s why it’s important to take the long view and come up with a plan—in both wellness and investing—that creates momentum in the direction of our goals. Don’t squander the power of time when you can recruit it to work in your favor.

Learning to live with the ups and downs of the stock markets is an essential part of becoming a successful investor. Of course, it’s not always easy to keep anxiety at bay. That’s why, in this video, the investment journalist MOIRA O’NEILL explains how investors can keep a rational mindset through volatile markets.

“More than any other time in history, mankind faces a crossroads. One path leads to despair and utter hopelessness. The other to total extinction. Let us pray we have the wisdom to choose.” – Woody Allen

The ‘news’ as presented to us has always had a negative bent, but one could be forgiven for thinking that it’s become even more negative with constant stories of disasters, conflict, wrongdoing, grievance and loss. This was an issue prior to coronavirus – with trade wars, social polarisation, tensions with China, worries about job loss from automation and ever-present predictions of a new financial crisis. Since the pandemic higher public debt, inflation, geopolitical tensions and rising alarm about climate change have added to the worries.

We started Dimensional in 1981 around a set of beliefs.1 These ideas remain core to our business and key to the experience we deliver.

1. Investing Is a Science

Professional money managers have offered their services for centuries, but until the 1960s, there was no empirical way to hold them accountable for their results. When computers became powerful enough to analyze immense amounts of data, researchers could start gathering and learning from historical stock returns. Now economists could measure the success of different investment strategies compared with the performance of the broader market. The science of finance took off.