Alan is a Chartered Financial Analyst and 25 year veteran of the financial advice industry. After founding a discretionary portfolio management company based in Western Canada, he undertook the challenge of writing his first book. His goal was to offer readers an insider's perspective on why so many investors are stymied by investment decisions that fail to live up to their expectations.
Alan Fustey's Recent Articles
The Mathematics Of Losses
Will a 30% advance after a 30% decline in a portfolio, return the account to the same market value? The answer is no. It will actually take a gain of 42.9% to recover the lost capital. As an investment loss increases in size, the gain that is required to restore the loss begins to increase […]
Money Illusion – “A Dollar Today > A Dollar Tomorrow”
Money illusion refers to the tendency of individual investors to think of investment returns only in terms of nominal value. The term was coined by the economist John Maynard Keynes in his early twentieth century writings. Nominal value only uses current market value without taking into account the past and future effects that inflation has […]
Framing – Half Full or Half Empty?
Imagine that I am holding a glass that is partially filled with water. Is it half full or half empty? Either answer is acceptable because they can both be perceived as being correct. I am still holding the same half-filled glass, but I now tell you I just drank some of it. Is it half […]
Why You Hope That Stock Will Come Back
Risk aversion refers to an individual investor’s preference to choose an investment with a more certain, but possibly lower, expected outcome compared to an investment with an uncertain outcome. Individuals often choose investments with low but guaranteed interest rates, rather than investments that have the potential for higher returns, which also come with the chance […]
When Are Stocks Like Hotdogs?
Herding refers to the phenomenon of how individuals, who are acting independently, can sometimes unintentionally act together as a group. Herding behaviours are common in your everyday decisions. Imagine you are walking down the street and you approach two hot dog vendors. Neither has a line of people waiting to order, so at random you […]
Shortcuts to Ruin
Shortcuts to Ruin “Buy low, sell high” is likely the most widely quoted financial market truth of all time. It makes so much sense, yet it is one of the most difficult tasks to repeat successfully in financial markets. The fundamental assumption of your investment decision making is grounded in the belief that you will […]
Is Your Financial Advisor a Salesman?
By Alan A. Fustey When an advisor recommends that an investor purchase a financial product, there can be as many as five participants who have a financial interest in the transaction: • The investor • The financial advisor • The company that employs the financial advisor. • The company that manufacturers the product which is […]
Posted: July 23rd, 2012 under General.