Just one more week...

It was with a great deal of joy that I finished up my Risk Management and Insurance class on Thursday evening. I know way, WAY more about insurance of all types than I ever wanted to. It was not a particularly interesting class, but probably a good one to give me some basic knowledge about insurances.

I’ve still got one more week left of my Applied Investments class. I’ll just have to say that this class is probably one of the most interesting classes I’ve ever taken. The only other class that tops it was my study abroad in Germany and that’s really not even a fair comparison.

Applied Investments is a class about investing in mutual funds. In a former period of my life when I had a nice steady income, I invested in mutual funds. I had a basic knowledge of how they worked, but didn’t have a clue as to which fund was good nor how to determine what makes a fund good. And so I invested blindly. I got some returns on my investments, so I was happy.

When I enrolled in Applied Investments, I didn’t realize that it would be about mutual funds. I figured any finance professor worth his salt would recommend investing in individual stocks and playing the market. Playing the market has always seemed so risky to me, so I was quite relieved when my professor informed us of his investment philosophies, which made far more sense than I ever could have hoped.

One of the things that has been so enjoyable about the class is that what Dr. W is saying makes sense. I love things that make sense!! It makes the world of investing seem a little less cryptic. I never would have imagined that I could read a book about investing and not being bored out of my mind. But here I am, reading a book about investing and actually finding it very interesting.

I was reading about some studies of people and how they invest, and I couldn’t help but enjoy the following quote when I came across it the other day:

“The conclusion we can draw is that there is an inverse correlation between confidence and performance—the more confident one is in his/her ability to either identify mispriced securities or time the market, the worse the results. In studying men versus women, they found that although the stock selections of women do not outperform those of men, women produce higher net returns due to lower turnover (lower trading costs). Also, married men outperform single men. The obvious explanation is that single men do not have the benefit of their spouse’s sage counsel to temper their own overconfidence. It appears that a common characteristic of human behavior is that, on average, men have confidence in skills they don’t have while women simply know better.” (The Only Guide to a Winning Investment Strategy You’ll Ever Need by Larry E Swedroe)

I’ll let you draw your own conclusions. :-)

In checking out the mutual funds I hold, I have discovered that some of them have characteristics that are less than desirable, so now I need to do some research utilizing my new knowledge and fix my meager portfolio.

It would seem that there is a lot of dishonesty and shady stuff that goes on the CFP (Certified Financial Planner) occupation. A lot of people are being taken and used by their financial planners. They take advantage of their clients’ ignorance in financial matters. It’s evidently an occupation that is hard to keep the people honest because of the ignorance of their clients and the ease with which they can make money.

I find it all very fascinating. I suppose it’s a little late to change one’s major? Actually, I don’t need to change anything—with the Certificate in Financial Planning that I’ll be getting, I could get certified in financial planning if I so desired. Of course, Dr. W says that the certification exam is a highly difficult exam to pass. :-/ I guess he should know, he’s somehow affiliated with the testing organization.

Just one more week until my summer begins...

I'm ready!!