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Weekend reading: Investing wisdom from Jason Zweig

Weekend reading: Investing wisdom from Jason Zweig post image

What caught my eye this week.

Jason Zweig is an investment writers’ writer – the man my co-blogger The Accumulator models himself after, and the author of the only book @TA ever gave me as a present. (I’m hopeful the second one will be the completed draft of the Monevator guide to investing…)

Why, you might ask, does The Accumulator hold Zweig in such high esteem that he keeps a mugshot of the guy above the desk in his study, dotted with gold stars and a fake signature he forged by squinting his eyes and thinking of exorbitant expense ratios? (Probably).

I suspect it’s because the US veteran author has a similar ability to turn dry financial matters into pithy words of wisdom.

For a taster, here’s a few lines Zweig shared the other day:

  • In investing, as in life, too many people confuse wishes for beliefs and beliefs for evidence. Things aren’t valid just because you want them to be.
  • As you “learn” more, if your confidence doesn’t go down before it goes up, then you probably aren’t learning.
  • The future isn’t a straight line you can extrapolate from the past. The future is a storm into which we are blown backwards.
  • Walk as often as you can through the graveyard of your dead beliefs, especially the ones you murdered by your own hand.
  • Investing is a profoundly lonely activity, and it’s hard to pick your way through endless minefield of bullsh*t and boobytraps that the financial industry lays down unless you find a community of other investors at least as smart as you.

Those aren’t even particular meant as pithy one-liners by the way – they are all teasers to full articles that Zweig has written before.

See his post for the links – and set aside a couple of hours to devour them.

From Monevator

Who’s right about London commercial property – the suits in hard hats or the ones in the City? – Monevator

From the archive-ator: Why we must all think long-term – 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

Dividend tax proposal threat to rich savers and company owners [Search result]FT

US launches criminal investigation into Bitcoin price manipulation – Bloomberg

Call to end emergency tax on pension lump sums [Search result]FT

Noel Edmonds hijacks Lloyds AGM to accuse bank over £1bn fraud cover-up – ThisIsMoney

London house prices in worse annual slowdown since 2009… – ThisIsMoney

…as number of home owners in England rises slightly for first time since 2004 – Property Wire

Warning over “money flipping” Ponzi schemes on social media – ThisIsMoney

Retirement Pyramid 2.0 – A Teachable Moment

Products and services

Did you know you can get a no-claims discount on home insurance? – ThisIsMoney

Reputation of hedge funds hacked back hard [Search result]FT

Survey of pension millionaires reveals they own a lot of active funds – ThisIsMoney

Starbucks is beating Apple and Google in mobile payments – Quartz

An interesting interview about the state of ETFs and market tracking – ETF.com

What conditions and treatments aren’t free on the NHS, and what do they cost? – Telegraph

RateSetter will pay you £100 (and me a bonus) if you invest £1,000 for a year via my affiliate link – RateSetter

Comment and opinion

How to build a low-risk, high-yield portfolio of shares – UK Value Investor

Why it makes sense to invest in Government bonds [Search result]The Economist

More: Do long-term investors need bonds? – A Wealth of Common Sense

What is the point of fund platforms? – Pension Playpen blog

The market-timing game – Crossing Wall Street

All the money in the world – Fire V London

Fund managers and the illusion of skill – Rick Ferri

Philip Carret on forecasting market swings – Novel Investor

Fascinating interview with economist Jim Rickards [Podcast]Part 1 & Part 2

European companies just aren’t growing earnings like their supposedly over-valued US counterparts – Wall Street Journal

Why did Walmart buy India’s Flipkart, and will it pay off? – Musings on Markets

What venture capitalists actually care about when you’re raising money – Fast Company

Also: How much should you raise as your business grows? – Fred Wilson

Kindle book bargains

Total Competition: Lessons in Strategy from Formula One by Ross Brawn and Adam Parr – £0.99 on Kindle

Surely You’re Joking Mr Feynman: Adventures of a Curious Character – as told to Ralph Leighton – £0.99 on Kindle

Talking to My Daughter About the Economy: A Brief History of Capitalism by Yanis Varoufakis – £1.99 on Kindle

Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist by Kate Raworth – £1.99 on Kindle

Brexit: Still going better than anyone could have imagined

Mark Carney: Brexit already has households £900 a year worse off – BBC

EU talks with Australia and New Zealand deal blow to UK free trade plans – Guardian

How Britain’s departure from the EU stretches to mid-2020s [Search result]FT

HMRC estimates Brexiteers preferred customs system could cost £20 billion a year – BBC

Why a French philosopher wants to stop Brexit [Search result]FT

Polluting UK being sued by ECJ claims leaving EU will improve our air – via Twitter

Ex-mayor of Ipswich denied residency after 40 years in the UK – The Guardian

Off our beat

How Britain let Russia hide its dirty money – The Guardian

Electric scooter charger culture is out of control – The Atlantic

The Pygmalion effect: Proving them right – Farnham Street

And finally…

“The fact that making money from money is ultimately easier than making money from work is entirely logical when you consider that you only have a limited number of hours to work. On the other hand, your money “never sleeps”, as the old saying is quite right in telling us.”
– Andrew Craig, How to Own The World

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  1. Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. []

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{ 33 comments… add one }
  • 1 Fatbritabroad May 26, 2018, 7:20 am

    I can never get the ft links tk work nkw it just takes me through to the subscribe page snd I’m in desktop view

  • 2 John B May 26, 2018, 9:15 am

    The Office of Tax Simplification report is a mine of useful information, explaining the sequence of tax allowances so clearly and pointing out when HMRC SA system got it wrong. https://www.gov.uk/government/publications/simplifying-the-taxation-of-savings-income

    Of course simplification is likely to mean “rounding up” to Hammond, but did anyone really expect dividend tax rates to be lower than income tax ones long term

  • 3 The Investor May 26, 2018, 10:01 am

    @Fatbritabroad — I just checked, they work for me. Perhaps clear your browsers, or try incognito mode? (I did have to fill in a quick survey to view.)

    Hope that works. There’s no other option really, except to pull the FT out of the links, but they are the most consistently strong personal finance pages of the major newspapers from an investing perspective (the Times is good too, but truly pay-walled) so loathe to lose them.

    (I have an online subscription, and would certainly recommend one to any serious active investors / business types who are reading).

  • 4 Mathmo May 26, 2018, 12:45 pm

    Thanks for the links this weekend, TI. The only serious money subscriptions worth having are one to this site and one to the FT. Both excellent value.

    Love the market timing game, but I keep beating the market when playing it. Should I add “don’t time the market” to my graveyard of beliefs? Help!

  • 5 Mr Optimistic May 26, 2018, 3:15 pm

    Have to agree that this site is well worth the subscription :). Re the active fund/ pension millionaires article, worth noting that passive funds are relatively new. If you have been invested for long enough to get a million your formative years were in active unit trusts or investment trusts. The latter are so stuck in the mud that they haven’t really got round to dealing with costs and with the low discounts now I am selling them down in favour of passive funds and the odd OEIC or whatever. Not a millionaire however 🙂

  • 6 dearieme May 26, 2018, 4:43 pm

    Bonds:

    (i) The Economist ejected me. Did it have much to say that stands up?
    (ii) “Finance 101 tells us stocks should earn more money than bonds over the long-term most of the time.” You could equally well argue that fixed interest bonds should pay more than equities because the coupons are far more vulnerable to inflation than dividends are. But they don’t always pay more, do they? “Should” is not much help in finance, it seems to me.

  • 7 Learner May 26, 2018, 5:11 pm

    Right-click / long press (yep, works on mobile) then open in incognito works reliably for me. I think they count & limit free access with a cookie if non-incognito.

  • 8 dearieme May 26, 2018, 10:17 pm

    Thank you, learner. I have no idea what your detail means but the gist worked beautifully in Safari, where I opened a “private window”.

  • 9 Fatbritabroad May 27, 2018, 8:46 am

    Thanks the incognito mode works great

  • 10 Neverland May 27, 2018, 8:46 am

    @Optimistic

    The key thing about the millionaire pension investors survey is that it’s all taken from Hargreaves Landsdowne customers

    Mostly HL customers haven’t shopped around for a cheap platform and just responded like trained seals to the HL marketing avalanche

    Once they are in HL they will just respond to another avalanche of advertising about which active funds to buy

  • 11 Mr Optimistic May 27, 2018, 9:43 am

    @neverland. Yes that is probably true. My own bugbear us Fidelity who charge almost as much (0.35% v 0.45%) but for very much more limited fund choice and service. Think Fidelity are after workplace schemes and are aiming to let them drift into their SIPP. HL are worth the extra 0.1% in my view. However, I only have a limited amount with them.

    The Economist article, btw, is well worth the read.

  • 12 londoninvestor May 27, 2018, 10:38 am

    Wow, writing* an article about “How to become a pension millionaire” and not mentioning the Lifetime Allowance is quite something!

    The right answer to the question “How do YOU become a pension millionaire?” is: you don’t. If you’re heading in a direction where your pension would exceed the LTA, switch it into lower risk assets and put your equity exposure elsewhere.

    (People who already have £1m of course probably built up their assets in the past and taken protection from the LTA… but “pension millionaire” isn’t a sensible goal if you’re starting out now.)

    * The term is used loosely – “unquestioningly transcribing a press release from HL” would be closer to the mark…

  • 13 The Rhino May 27, 2018, 10:52 am

    Rolling rate at Ratesetter down to 2.3%! Lowest ever!

  • 14 arty May 27, 2018, 1:46 pm

    @Rhino
    Indeed – rates in recent months have been so low that it’s no longer worth the additional risk when compared with a savings account (or faffing about with a few current accounts) – I’ve withdrawn pretty much everything as a result.

  • 15 The Rhino May 27, 2018, 3:45 pm

    I was thinking the same. There’s no risk premium with P2P. Maybe everyone in it is like me, i.e. dumb-money? I’m going to ease out of it. Its wasting my time.

  • 16 Boltt May 27, 2018, 6:08 pm

    @arty & @rhino

    P2P – I’m typically getting ~3% for rolling and some older 5 year loans at 5.5%.
    I moved from 3/5 year loans to rolling loans to mitigate risk (albeit not transparent risks).

    If not p2p then where do you invest next?
    – more equities?
    – gilts (no thanks at those prices)
    – pref shares, I’m still suffering from Aviva’s poor behaviour
    – BTL/REITS

    At this rate I will need to take a more Active approach!
    (5-6% total return would be enough)

    B

  • 17 Kraggash May 27, 2018, 6:28 pm

    “Electric Scooter Charger Culture Is Out of Control”

    Wait, what?

  • 18 Naeclue May 27, 2018, 7:28 pm

    Well I am an outlier at HL as I have a 7 figure SIPP in drawdown and none of it is in active funds. Just ETFs and gilts.

  • 19 dearieme May 27, 2018, 7:47 pm

    If they want to take an enormous risk with their money to earn 5% p.a., a couple could open three current accounts at TSB.

  • 20 algernond May 27, 2018, 8:54 pm

    Just need to point out that the ex-Ipswich mayor hasn’t been denied residency. She already has Indefinite Leave to Remain (permanent residency).
    It’s British Citizenship she’s been refused (quite different).
    Still poor/ inefficient treatment by the passport office though, which will means she has to fork-out another £1000+ to apply again.

  • 21 Kraggash May 27, 2018, 11:29 pm

    @Naeclue – then I guess you are hoping HL do not upgrade their systems like TBS did…..

  • 22 Naeclue May 29, 2018, 7:56 am

    @Kraggash, not being able to access my SIPP when I want to could prove very inconvenient and is something that has crossed my mind. To mitigate such a problem I do complete my drawdown for the year in January, 3 months before year end. I hold my ISA and other investments at another broker as well, just in case of some unknown unknown hitting HL.

  • 23 JohnG May 29, 2018, 12:28 pm

    dearieme – IFISA have made P2P a lot more attractive to me again. If you’re a higher rate payer then earning ~6% after (ignoring) tax justifies some risk. I said 6% because that’s what we’re projected on new lending over 3 platforms on new loans; lending on 3-5 year basis.

    I don’t have enough S&S that I’m losing any capital gains benefits by having ~£30k in IF ISAs instead of S&S ISAs, and as we’re likely to remain higher rate payers we want to get as much as we can within an ISA wrapper without but cash ISA rates are aweful.

  • 24 The Rhino May 29, 2018, 1:46 pm

    @JG – maybe the sweet spot of P2P is the more illiquid end? i.e. up at the 3-5 year mark?

    6% is pretty much double what you could get on 3-5 years for cash, which seems reasonable..

    2.3% instant access at ratesetter vs 2.5% for cash at nationwide – well that is the very definition of dumb-money (thats where I sit as of right now!)

  • 25 Fatbritabroad May 29, 2018, 1:59 pm

    I use ablrate at 12%to 15% but this is very definitely my high risk end. I then have the same amount in lending works at 6%. Five year loan but can sell out for a 0.6% fee basically gives me 9% average on 10k of which half is insurance and provision fund backed. I have 60k total atm non pension investments I wouldn’t put anymore than 20% of my non pension assets in p2p. If i view lending works as fairly low risk but i still wouldn’t chance it

  • 26 The Investor May 29, 2018, 2:21 pm

    @TheRhino — The rolling market was long an anomaly, and where I had all my RateSetter P2P cash for that very reason! 🙂 Of course there was an element of ogre’s dinner party arrogance about assuming you’d get out before the crowd. (But as we all know I’m an ogre in my spare bedroom ha ha. 😉 )

  • 27 Boltt May 29, 2018, 5:03 pm

    I seem to have been getting 3% on the ratesetter rolling account today – I do set mine to 2.9 – 3.1 rather than accept the live rate.

    I have been moving out of the 5yr into the rolling account as the basis if they have problems the rolling money is unlikely to be affected to the same degree as longer term money.

    Has anyone read the full t&c to find out if all accounts are likely to take a haircut if Ratesetter find themselves in trouble?

    B

    Ps the best Instant account rate I found was ~1.25%

  • 28 The Rhino May 29, 2018, 5:57 pm

    @Boltt – thats a good idea – I think I’ll do the same.

    @TI – whats an ogre’s dinner party? have you ditched RS now then?

    Like a lot of these things where one says ‘ooh I’d only devote a few % to it tops’ you end up wondering whether its worth bothering at all?

  • 29 The Rhino May 29, 2018, 5:58 pm

    @Boltt – not sure I’d bother putting the upper limit on it though 😉

  • 30 The Investor May 29, 2018, 11:00 pm

    @The Rhino — I bought a flat, you recall! 😉 That has taken care of most of my “where shall I put this cash” queries for now. 😉

    Also, @Bolt is quite right to point out the best instant access accounts are far lower than the 2.5% you are quoting for cash. You are comparing instant access at RateSetter with fixed rate (or special regular saving or similar) in a normal cash account. Quite a bugbear of mine.

    It’s fair enough to say RS isn’t worth it for you here for this or that reason, of course. But conflating different categories adds some darkness where there might have been more light. 😉

    Ogre’s dinner party is where everyone rushes for the exit once the last bit of pudding has been eaten and whoever is left gets eaten by the host! (It’s an old market expression for markets where everyone assumes they will be cleverer than the other people at the table and get out first…)

  • 31 The Rhino June 4, 2018, 12:46 pm

    @Boltt – cheers for the tip, just got 2.9%, that was worth 1 seconds work

  • 32 mike June 13, 2018, 1:47 pm

    Coming to this late, but if you insist on including a swathe of Brexit stories, maybe fact check some of them first? They discredit the rest of your useful posts.

    – Mark Carney: Brexit already has households £900 a year worse off
    Status: unproven: https://fullfact.org/economy/are-families-900-worse-brexit/

    – HMRC estimates Brexiteers preferred customs system could cost £20 billion a year
    Status: dodgy maths and double counting, could be as low as £2bn – https://brexitcentral.com/getting-facts-straight-true-cost-maxfac/

    – Ex-mayor of Ipswich denied residency after 40 years in the UK
    Status: denied citizenship, not residency, as above in comments, due to Home Office incompetency, not Brexit.

    I know, your site, your rules…

  • 33 The Investor June 13, 2018, 3:49 pm

    @Mike — Well, I wouldn’t say it’s fact-checking with Brexit, these are always moving stories with multiple perspectives. The Ipswich story does seem to have been misreported, and I agree it does look more like HO incompetence (albeit the “hostile environment” modus operandi that arguably helped lead to Brexit) rather than Brexit.

    Carney is a matter of opinion, I think it’s probably an underestimate if anything, given how GDP growth has slowed to treacle. Yes it’s an estimate, that’s what we’ve got when making decisions about the future. We can’t really say it’s right or wrong, I’d agree it’s “unproven” but that is the nature of an estimate.

    Re: Maxfac, I later saw the clarification that c.£6-7bn would be on the EU side to bear, and I agree it changes the maths somewhat. The rest is at least as speculative as Carney, if not more. And even with £7bn on the other side, we’re still adding friction to trade and spending money on paperwork when we could be spending it on something useful such as R&D or planting trees or ice creams. Which is why, of course, the free trade area was agreed in the first place.

    As ever I remains sympathetic (but unconvinced personally) that sovereignty was a valid reason to vote Brexit. The economics will never make sense IMHO, especially as we were not in the Eurozone and have our own currency. Cheers!

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