We here at Don't Quit Your Day Job are a cynical crew. We have a keen sense of the absurd - and the stench of inappropriate numbers is very clear in this article. You see, there is a position on Wall Street called a Financial Analyst - and those Analysts are trusted to do a very fundamental job: break the investment prospects in various companies down into one of 5 categories. There are positive categories (like buy or overweight), neutral categories (like market perform, market weight or... neutral) and negative categories (like sell and underweight). Different firms have different ratings, but all ratings fall into one of those three bins.

Weekly links we liked!

Calculate the total return on the S&P 500 between two dates including reinvested dividends and inflation.

You recently completed a very verbose series here at DQYDJ on investor psychology, the failure of the Efficient Market Hypothesis, and how to improve on buy and hold. If you survived all of that, you're probably wondering: "hey PK! You mentioned in the EMH article that you trade stocks on valuation. How do you know that you're doing the right thing?"

Good point dear reader, and to tell you the truth, until I ran the numbers this weekend I wasn't quite sure. However, lucky for you and my ego I have now run the numbers and am ready to share my investing history.

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Listen to us on our Podcast at The Free Financial Advisor.

Since you've now read my treatises on Investor Psychology and the Flaws of the Efficient Market Hypothesis, we're finally ready to discuss what we originally set out to discuss - how to improve on buy and hold investing, Rob Bennett's controversial ideas on "valuation informed indexing", the concept of the safe withdrawal rate, and the state of buy and hold investing.

Are you an active or a passive investor? As with all things in finance (such as the type of investor you are), there are shades of gray, but you can basically break down investing strategies into one of those two categories.

Although many authors try to boil down investment advice to the generic and claim it's "one size fits all", here […]

Another week's worth of links!

The Kelly Criterion is the brilliant summation of a betting strategy first discovered by Information Theorist John Kelly. Kelly came up with a betting system, his criterion, which optimizes bankroll growth based upon known odds and a definite payout. Roughly, if you can find an exploitable, repeatable edge... Kelly's system tells the maximum you should bet based upon that criteria.