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Weekend reading: Investing Demystified 2.0

Weekend reading: Investing Demystified 2.0 post image

What caught my eye this week.

I enjoyed a top floor view over the Thames this week at the book launch for the second edition of Lars Kroijer’s Investing Demystified. It was a pleasure too to meet his family including his young children, one of whom said she hadn’t read her father’s book because it was likely to be “gobbledygook”.

It’s commendable to be so skeptical at such a tender age about people who promise to share the secrets of making money. But Monevator readers who know Lars from his contributions to our website will surely beg to differ.

Indeed many of you have already read the first edition of Investing Demystified. Should you get the second? It’s substantially the same book, but Lars notes:

“Compared to the earlier edition I have downplayed the addition of non-essential elements to the book and moved to the Appendix a number of more tangential points, while keeping the core elements and focus on the rational portfolio unchanged.”

You probably don’t need both editions, then, unless you’re a Kroijer completist (in which case you ought to get his enjoyable hedge fund book, too).

If you’re new, starting with the new edition (which costs £16-ish from Amazon) is the way to go.

From Monevator

The snowball and the paper trail – Monevator

From the archive-ator: Coping with the guilt of losing money – Monevator

News

Note: Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber.1

Buy-to-let property sales fall by 50% in a year – Guardian

Index fund evangelist Burton Malkiel is straying from his gospel – New York Times

Middle-class borrowers sitting on a debt timebomb [Don’t tell @ermine!]ThisIsMoney

Triple-lock on pensions will go eventually, says pensions secretary, rightly – Guardian

MSCI is adding China A-Shares to its emerging markets index – Advisor Perspectives

Products and services

Lenders warn low mortgage rates may not get any lower – ThisIsMoney

Rising inflation pushes student loans interest to 6.1% [Search result]FT

Banks increasingly offering mortgages via online video interviews – ThisIsMoney

Ten most popular products for Lifetime ISAs – Hargreaves Lansdown

Hedge funds can’t be killed by normal weapons – Bloomberg

Comment and opinion

Don’t weigh up the gurus, pick your own asset allocation – Oblivious Investor

10 ways to protect against ballooning inflation [Search result]FT

Why don’t ‘winning’ active fund managers keep winning? – Retirement Researcher

Financial literacy? Fat chance! When knowledge is useless – A Wealth of Common Sense

Inside the booming world of initial coin offerings [Podcast]Bloomberg

Can anyone make a case for active investing versus passive investing? – Marketfox

Working (for a) Living – SexHealthMoneyDeath

Who is the dividend champion: Shell, HSBC, or BAT? [PDF]John Kingham

If you do seed investments (such as via crowd-funding) then diversify widely – Medium

Interesting interview on simplifying investing with Morgan Housel – Chris Reining

A risk facing ‘low-risk’ consumer stocks: Consumers who don’t care – The Value Perspective

Valuing Uber: Doomsday scenario or business reset? – Musings on Markets

Brexit: One year since Doh-day

Boo to Brexit says Nick Harkaway on Twitter

Getting clearer by the day: Britain has voted for the worst of both worlds – Guardian

The UK economy since the Brexit vote in four charts [Search result]FT

EU leader says UK’s citizen offer could ‘worsen situation’ – BBC

Anatomy of a comeback: The EU’s resurgence in charts [Search result]FT

How Brexit has affected the [liberal elite] dating scene [Search result]FT

Survive five years in this twat factory and you’re in for life, EU citizens told – Daily Mash

Off our beat

How Helen Hawkes filled her years with life – BBC

Steve Jobs made the iPhone because he “hated this guy at Microsoft”Guardian

The fall of Uber’s CEO reveals the potential of a single blog post – The Verge

Due to global warming, fish and chips and sushi, cuttlefish to inherit the seas – New Scientist

And finally…

“Investors who embrace the fact that they do not have an edge are not necessarily unknowledgeable or naïve about the world of finance. In fact they may be the smartest person in the room.”
– Lars Kroijer, Investing Demystified

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{ 21 comments… add one and remember nothing here is personal advice }
  • 1 Gary Grand June 23, 2017, 6:36 pm

    I was at the book launch last night as well. When I spoke to Lars I did say it was through your blog that I came across his first edition. It was a good to talk to his parents, an enjoyable evening. PS you weren’t the short American who lived the other side of the Thames I was talking to lol

  • 2 Tim Kim @ Tub of Cash June 23, 2017, 7:19 pm

    I like emerging markets. 35%+ return in the past year and half. And I feel valuation is still low. And I think adding China to the MSCI benchmark is a good thing. China’s market cap is still fairly low, relatively-speaking. There’s much more room to grow there in the next coming decades.

  • 3 John B June 23, 2017, 7:47 pm

    RPI+3% for student loans is dreadful gouging, 6.1% compared with 3.4% for a Nationwide unsecured loan. They really ought to be offered at near the rates the government can borrow at, if there is any truth that the expansion of higher education is investing in our children.

    It still amazes me that most people won’t pay off student loans, as 9% tax over £21k for 30 years sounds huge. Can you hide from the student loan company by upping pension contributions? If so the tax benefits of pensions are more valuable than often portrayed.

  • 4 dearieme June 23, 2017, 8:09 pm

    “Buy-to-let property sales fall by 50% in a year – Guardian”
    What a winner for the Groan. It agitates for years for anti-landlord legislation and now it will get to agitate about the consequences.

    “Index fund evangelist Burton Malkiel is straying from his gospel – New York Times”
    I rather like his book – picked up at a sale,of course. I suppose that anyone persuaded by his new case had better invest soon before the advantages are all competed away.

  • 5 dearieme June 23, 2017, 8:12 pm

    “if there is any truth that the expansion of higher education is investing in our children”: the statement is too mystic to allow anything so vulgar as an assessment of its truth or falsehood.

    The proper question is probably ‘is higher education principally a public good or a private good?’

  • 6 hosimpson June 23, 2017, 8:17 pm

    Thanks for the link to the FT’s Brexit charts. It doesn’t look very good, does it? I smell a recession a coming… better start replenishing that emergency fund.
    (And no, this is not all because remoaners such as myself have been talking down the economy.)

  • 7 october June 23, 2017, 9:04 pm

    I see in Demistified 2 recommended Minimal risk asset in UK is still VGOV, as Demist 1
    US has SHY , a 1-3 year Treasury and notes VGOV is UK equivalent.
    Given VGOV has 12.2 year duration, is this really an equivalent?
    Germany is IBOXX 1-3yr
    Also in recent articles LK seems to go towards short term bonds or even cash.
    Is VGOV really still suitable as UK Min risk asset ?

  • 8 FrugalFox June 24, 2017, 9:21 am

    Compelling piece by the FT about protecting against inflation.
    The fact that at the top of the article they state that inflation is good for borrowers (it generally is) but then later talk about paying down the debt is interesting.

  • 9 Gregory June 24, 2017, 10:04 am

    I don’t follow Lars’s advice but read every article, books from him and suggest them to everybody. I’m a very frugal type so I am not happy to so see the price of the new book. It is a wonderful book but a bit expensive.

  • 10 Grislybear June 24, 2017, 11:39 am

    @october. I would suggest that GLTS is less risky than VGOV if you are looking for a UK minimum risk asset.

  • 11 AtlanticSpan June 24, 2017, 2:51 pm

    Lars advocates owning the government bonds of one’s home country. Is this still valid,given inflation is on the rise,or should linkers be part of the mix even though they’re expensive?

  • 12 L June 24, 2017, 9:02 pm

    @Hosimpson –

    Unfortunately I suspect you’re right. Falling house sales, consumer spending and rising debt as wages fail to track inflation. Suspect UK will talk itself into a recession regardless of fundamentals, why oh why did we go down this path just when things were improving in the global economy?

  • 13 Matt June 25, 2017, 8:43 am

    Don’t know about the current version of student loans, but my repayments (the previous 9% of everything over £15k) were *after* pension contributions.

  • 14 The Investor June 25, 2017, 11:24 am

    Morning all. For anyone interested in Lars’ position on minimum risk assets we have recently published some long articles by him on this, which you’ll find in his archive here:

    http://monevator.com/tag/kroijer/

    Regarding cash, as you’ll read in those articles Lars does see the case for private investors holding cash as (part of) their minimal risk component. I can’t speak for Lars, but I can say I nudged him into including the cash section in those articles, however, and they weren’t so prominent in the first drafts. I do have a strong sense Lars feels that edge-less investors trying to second guess the government bond market and holding cash instead may be adding unnecessary and potentially detrimental complications to their strategy, as over the decades you’ll spend time, make some wrong calls, and reversals in the government bond market aren’t what holes portfolios anyway, as we’ve discussed in previous articles a hundred times. Whereas saving regularly, auto rebalancing, and so on into a few simple trackers will give you a discipline and take advantage of highs and lows in markets as a by-product, plus not tempt you into delusions of market beating grandeur etc.

  • 15 Mr optimistic June 25, 2017, 1:14 pm

    Re index linked gilts, one of the links above calls IL gilts the most structurally expensive asset in the world at the moment.L&G do a global inflation linked bond fund which I bought as I couldn’t stomache the premium for gilts. Fairly priced and duration, which I found once but can’t at the mo, is better ( shorter,) than the all stocks index.

  • 16 Mr optimistic June 25, 2017, 1:47 pm
  • 17 Mathmo June 25, 2017, 3:49 pm

    Thanks for the links this weekend, TI. I think the new format is going well and hope you’re enjoying more Saturdays doing what you enjoy (recklessly seeking active investments? 😉 )

  • 18 reckless saving June 25, 2017, 5:21 pm

    @John B – the amount you pay back on student loans can be reduced if your employer offers salary sacrifice schemes, like pensions, child care, cycle schemes. Your actual salary is classed as a ‘reference salary’ and you have a lower secondary salary which takes into account sacrifice scheme out-goings and is the starting point used for taxes to be based on. Government endorsed tax avoidance, or as Martin Lewis likes to call it as :-
    Tax planning. Here you organise your finances in such a way as to take advantage of state-encouraged schemes which are designed to reward you to act a certain way, with the incentive of paying less tax.

  • 19 Fremantle June 26, 2017, 10:18 am

    If enough automated smart beta trading enters the market to exploit inefficiency, how long is that inefficiency likely to last?

  • 20 David June 26, 2017, 11:34 am

    Hi Investor

    If you’re linking to Daily Mash articles now then can I suggest this one from the site today which seems kind of appropriate:

    http://www.thedailymash.co.uk/politics/politics-headlines/remainer-celebrates-one-year-of-moral-high-ground-20170626130449

    Remainer celebrates one year of moral high ground

    A REMAIN supporter has marked one year of feeling superior to the ignorant plebs who supported Brexit.

    and so on….

  • 21 The Investor June 26, 2017, 12:15 pm

    @David — Yes, it’s some small comfort, but a rather Pyrrhic one.

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