News & Views Summer 2008 Knowledgeletter: Bear Markets, Loss Aversion and What Warren Buffet Thinks

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It's been a busy summer—for both me and the markets (we'll get to the markets in a moment).

RightPath's summer highlight is our soon-to-be open office at 307 Main St. in Frisco. Constructed by friend and prominent developer Rob Phillipe, the office is nestled between the Remax Building and Tuscato's Restaurant.

With so much focus on business, I did not participate in this year's Courage Classic for The Children's Hospital—but look for riding and fund raising news in the coming months!

In the meantime, the following articles should help you to take heart with respect to investing. Despite all of the "ugly" we've seen lately, there are still some good points to a bear market!

We are delighted if you wish to forward this newsletter to colleagues or friends whom you believe would find it useful. Of course, if this newsletter was forwarded to you and you would like to receive future issues, you are welcome to subscribe.

Enjoy your summer!
Steven R. Smith

The Ugly, the Bad and the Good There have been a few key—and genuine—economic issues fueling the current market downturn. But, bear markets always look ugly—and interminably bad—while we are enduring them. So, is your plan firmly in place to take advantage of the good side of this downturn: affordable securities? Even when things look their bleakest, sticking to a comprehensive strategy usually provides the best approach over the long haul.
Read on...

Peccadilloes: Loss AversionPsychologically, we have a stronger drive to avoid a loss than we do to seek a gain of the same size. This drive can significantly impact our financial decision making—from being too conservative to hanging on too tightly to a loss that should be let go. Being aware of loss aversion and how it affects our decisions can reduce the negative impact this peccadilloe has on our financial plan.
Read on...

Warren Buffet’s Market ConfidenceFrom a wager with a $1 million outcome to an investment with a $50 billion risk, Warren Buffet—Berkshire Hathaway’s “Oracle of Omaha”—puts his dollars into low-cost index funds or their equivalent. Historically, this strategy has been “on the money.” Buffet believes it will continue to be a winner—should you take stock in it, too?
Read on...