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Be aware of your emotions - step away from yourself

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Be Aware of your Emotions - Step Away from Yourself


Dear Friends,

Please find attached the latest BFM newsletter with a new format! You can also find it here. In summary: 

Be aware of your own emotions and cognitive traps to make smarter decisions.

Step away from yourselves to be more rational.

Remember that we unconsciously make decisions based on positive memories.

Learn about financial history to reduce the number of mistakes. Do not extrapolate the recent past.

Keep a well-diversified portfolio and an investment diary.

Have a Financial Plan.

Click here to see the Newsletter!

PS: Last night, at the CFA Chicago Annual dinner, Professor J. Siegel from the Wharton School shared with us his current views of the market. He thinks that the S&P 500 should be at 1855, so about 45% above the current level. Even if there is a recession in the U.S., he believes that U.S. stocks are 15% undervalued. He is optimistic about the future because the Internet and communications revolutions will increase productivity growth which will increase long term economic growth which depends on discoveries, innovations, and inventions.


He also showed us the approximate value, adjusted for inflation, in June 2011, of $1 invested in 1802:


                       Real Value of $1                        Real Return


                      $ 726,000


Bonds                        $ 1,500                           3.60%
Bills                        $ 300                           2.80%
Gold                        $ 4                           0.70%
Dollar                        $0.05                          -1.40%


This newsletter was first published in November of 2011