What would today be if I didn’t pile on to the NFL replacement referees. Here is a sampling of my Twitter feed that blew up last night after the game:

• If you’re holding your baby & I walk up and hug it, according to the NFL replacement refs, you have to give me your baby. ~robfee on Twitter
• BREAKING: Iran President Ahmedinejad invites replacement refs for next round of nuclear inspections. ~ianbremmer on Twitter
• If the NFL replacement refs were judging the Revolutionary War, we’d all be British. ~richarddeitsch on Twitter
• Chuck E. Cheese on a Saturday afternoon is more under control than NFL games are right now. ~bcondotta on Twitter
• These NFL refs are giving a good name to boxing. ~bespokeinvest on Twitter
• Football’s Who’s On First Moment

With that behind us, let’s focus on the global economy for a moment. Last night after the close, Caterpillar Inc. (CAT), the world’s biggest construction and mining equipment maker, cut its forecast for 2015 earnings after commodity producers reduced capital expenditure.
Caterpillar said profit will be $12 to $18 a share, compared with a previous projection of $15 to $20. While a global recession remains possible, Caterpillar is forecasting moderate and “anemic” growth through 2015, Chairman and Chief Executive Officer Doug Oberhelman said yesterday in a presentation to analysts at the MINExpo industry conference in Las Vegas. Construction activity in emerging markets will probably show modest improvements, he said.
“We’ve seen a slowing in economic growth that was more than we expected,” he said. “We think ‘13 could look like 2012 in terms of worldwide economic growth.’’ ~Bloomberg

“In my decades as an investor and analyst on Wall Street, I have
learned that panics come and go. They turn out not to be the main cause
of investors’ financial setbacks. Rather, what hurts most investors most
is a failure to understand the basics of investing. Not grasping the
simple mathematical drivers of returns invariably leads to very costly
errors.” ~Barry Ritholtz

I could not have said it better myself. It is about math and emotions. After the markets sprint higher this year in the face of very real dissonance, I thought it was time to post this to make sure my readers keep their emotions in check, keep the focus on the long-term and not get greedy. Stay tuned & stay hedged! {TJM}

Top 10 Investor Mistakes | Barry Ritholtz

1. High fees are a drag on returns {We tend to focus on net returns. If a manager has a high fee, but has high risk-adjusted returns than it makes sense to allocate to this manager.}
2. Reaching for yield {Especially critical now in a low yield environment, that the Fed said will last at least until 2015.}
3. You (and your behavior) are your own worst enemy {Controlling the limbic portion of our brain that sits atop our spinal cords is critical at extremes: do not get greedy at market highs and do not get scared at market bottoms.}
4. Mutual funds vs exchange-traded funds {We agree that these are not mutually exclusive. Remember that there is no risk management in ETF’s so we need some active management for the next bear market.}
5. Asset allocation matters more than stock picking {I always ask: why does business media spend so much time on stock selection when research shows it is one of the least important factors in long-term returns?}
6. Passive vs. active management {Again we agree that these two need not be mutually exclusive and you can have traditional active strategies, with passive ETF exposure and alternative strategies in your portfolio.}
7. Not understanding the long cycle {We believe that currently we are in a cyclical bull market (short-term) within a secular bear market (long-term) as this balance sheet recession takes years to unwind.}
8. Cognitive errors {One of the first things we need to realize is our shortcomings in investing. Humans are not wired to be good investors and we all cannot be Warren Buffett. Thus know your limitations and set policies that will help you avoid these pitfalls when volatility strikes your portfolio.}
9. Confusing past performance with future potential {As I have stated before, Morningstar ratings have NO predictive value. Even though many investors cherish star ratings, this is only focused on past performance and nothing else.}
10. When paying fees, get what you pay for {Unlike most other professions, we must earn our fee every quarter. As a fiduciary the only way we get paid is by our clients and that is it. Make sure that when you spend money on advice you get open lines of communication, someone who is a fiduciary, complete transparency in regards to investment strategy and fees and someone that will meet your expectations.}

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