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Weekend reading: Investor, know thyself

Weekend reading: Investor, know thyself post image

What caught my eye this week.

Investors can be overwhelmed by 2018 forecasts in the first week of January. Those with long memories might ponder how much use such punditry was in 2017. Or in any of the years before that.

As an alternative to trying to guess the future – or to making your future self into a better you, via a raft of resolutions – how about getting to know who you really are now?

Most people tend to think they know themselves best. And the sort of personality types that are drawn to investing and financial freedom – INTJs, in the lingo discussed by My Deliberate Life in the links below – often feel those who are different are not different but wrong.

In reality, we’re all driven by different impulses, for good as well as ill. Those motivations can be a mystery to ourselves.

Which is all a long-winded way of introducing a cute quiz from Schroders called InvestIQ:

My results from the quiz reminded me that I am an individual thinker who does deep research – and also that I’m a natural pessimist. It also claimed I’m much more anxious about investing than the average person.

I was surprised by this last point.

My first thought was anxiety is an edge as (for my sins) an active investor!

My second thought was no wonder my stock picking adventures have become increasingly stress-inducing over the past few years.

Something to ponder in the weeks ahead, anyway.

Take the test and see how you fare.

Happy new year!

From Monevator

The Slow and Steady passive portfolio update: Q4 2017 – Monevator

From the archive-ator: What the Buffett family has always known about cash – 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

Cost of living squeeze dents UK house price growth – Guardian

‘Fleecehold’ complaints flood in as residents battle to turn tide – Guardian

Average UK worker needs a £300,000 pension pot – ThisIsMoney

2017: The year in charts – Pension Partners [more from Irrelevant Investor]

Products and services

Mortgage lenders start the year with a flurry of rate cuts – ThisIsMoney

What to do with maturing Pensioner Bonds – Guardian

Credit card balance transfer fees drop to lowest in a decade [Search result]FT

Earn £100,000 or more? You may fall foul of the complex pension ‘taper’ rules – Telegraph

The Ripple effect: Questioning this week’s hot cryptocurrency [Search result]FT

How branding is fueling the cryptocurrency craze – Co.Design

Comment and opinion

Making history by doing nothing – Morgan Housel

How to hedge your finances against a future Corbyn government [Search result]FT

Investing: The evidence [45-minute video]Robin Powell / YouTube

Personal debt: How to shred your borrowing this year – Guardian

Financial freedom and personality types – My Deliberate Life

This is where we are [On the crypto mania]The Reformed Broker

Earning more is not cheating – The Escape Artist

The unprofitable reality of tobacco stocks – The Value Perspective

All about edge – Gannon on Investing

I’m selling BP because of its high debts and uncertain future – UK Value Investor

Time for market timing? – Simple Living in Somerset

The future of venture capital, with 26-year old Sheel Tyle [Podcast]Invest Like The Best

Investing lessons from a surreal 2017 – Financial Samurai

Personal portfolio review: 2017 – DIY Investor UK

Volatility drag and its impact on (arithmetic) investment returns In Monte Carlo analysis – Kitces

Would you recommend a career in investment management to a new college graduate? – Abnormal Returns

Off our beat

The cost of a six-pack – Vice

There is no such thing as ‘the blockchain’ – Slate

The best time of day (and year) to work most effectively – Washington Post (via Mike)

Richer millionaires are happier, especially if they made their own money [Research]HBS

And finally…

“A mighty bubble of wealth is blown before our eyes, as empty, as transient, as contradictory to the laws of solid material, as confuted by every circumstance of actual condition, as any other bubble which man or child ever blew before.”
– Edward Chancellor, Devil Take the Hindmost

Like these links? Subscribe to get them every Friday!

  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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{ 46 comments… add one }
  • 1 Robert January 6, 2018, 12:34 pm

    I got the same results as you. And too think there maybe some bias towards anxiety. For me I think the trait it is calling anxiety is just my need to track performance after a decision has been made and then feedback into my next decision, rather than forget it and move on.

  • 2 Matt January 6, 2018, 12:38 pm

    I am “The Vigilant Planner”! Does detailed homework, doesn’t act impulsively, but likely to procrastinate.

  • 3 Egremont January 6, 2018, 1:38 pm

    Another vigilant planner here!

    What is the most cash-like thing which is not cash? I ask because I have transferred a SIPP in cash to an online broker. I want to have a think what to do with it, but there is counterparty risk in leaving it as cash in the broker’s hands. It’s >200k, so even if some is covered by a govt guarantee, not much is. I think the answer is to buy a 1-5 year gilt etf. Is that about right?

  • 4 Naeclue January 6, 2018, 2:18 pm

    Heard about PRIIPS? a real pain coming out of Europe restricting what we can invest in. In my Hargreaves

  • 5 Naeclue January 6, 2018, 2:27 pm

    Whoops, pressed publish by accident. What I was going to say is that I have 2 US listed ETFs in my SIPP. Out of the blue I received a message from HL telling me I will no longer be allowed to buy any more as they don’t produce KIDs that meet this new PRIIPS requirement. For me this is a minor irritation as I am in drawdown and will quite probably not want to buy more any way.

    Enough to make me sympathise with some of the Brexiteers frustrations though.

  • 6 Retirement Investing Today January 6, 2018, 2:30 pm

    That US CAPE chart makes for sobering reading. Countries like Aus and the UK show nothing like the level of overvaluation under the same analysis spotlight but of course would also follow the US down if/when? it did/does go pop. Of course I’m planning on no investment change because of it as I mumble the words “must just buy, hold and rebalance mechanically…”

    Wishing you and all fellow Monevator readers all the best for 2018!

  • 7 Naeclue January 6, 2018, 2:35 pm

    @Egremont, you might be better off just buying a short dated gilt if your broker let’s you.

  • 8 John B January 6, 2018, 2:42 pm

    One problem being an active investor is that you kick yourself when you pick wrong (and cheer when you pick right), but that smacks of the gambler’s problem, they enjoy the occasional success more than the regular lossees. To be passive, and not try to time the market, may mean you make losses, but you beat yourself up less about it.

  • 9 PC January 6, 2018, 2:44 pm

    Me too
    – defining characteristic: anxious about investing
    – least likely to: act impulsively

    There’s a huge difference between being anxious before making a trade and afterwards. They don’t distinguish as far as I can see.

    Taking care before trading to do your own research for example is good. Worrying about it afterwards is bad.

  • 10 PC January 6, 2018, 2:49 pm

    My full summary:
    Investment strength: Doing your homework
    Defining characteristic: Anxious about investing
    Most likely to: Excessively worry about making a decision
    Least likely to: Act impulsively

    Looks pretty good to me from a long term investing POV

  • 11 Matthew January 6, 2018, 2:57 pm

    In an anxious investor with 50% small cap and 10% emerging markets…

  • 12 Gadgetmind January 6, 2018, 4:41 pm

    Sounds like we’re all anxious! However, my portfolio (and I guess that of a few others here) contains investments that would make your average IFA swoon, but like some of the bets in the questionnaire, there was/is asymmetric risk/reward and that’s certainly good enough for me. BTW, I don’t think I got any of the bets wrong, or at least wasn’t told that I did.

  • 13 Grislybear January 6, 2018, 5:39 pm

    I took the test and the results are not what I expected. I’m good with uncertainty, follow the crowd, over- optimistic and least likely to panic about investments. I have got to chew over this. Happy new year everybody

  • 14 SurreyBoy January 6, 2018, 5:41 pm

    Im also anxious re investing – and i must say the test report summed me up perfectly. For example im 60/40 across pensions and ISAs, but already starting to sweat about melt ups and subsequent crashes etc. Frustrated by the knowledge that attempting to time an exit and re entry will very likely fail. Also sweating on SWR and how much of a pot is needed to fund decent ER. In short, sweating on all of it frankly but cant see an alternative to keep investing away. No matter what i read about “in the long run investing is the best option” i still worry about a ten year bear market as i hit the end of the treadmill. Not asking for advice but just setting out my version of what they call an anxious investor. HNY to all.

  • 15 Robert January 6, 2018, 5:56 pm
  • 16 Andrew January 6, 2018, 6:02 pm

    Yet another anxious investor here! – I suspect that everyone will qualify as an anxious investor as the suggested course of action is to take investment advice (No conflict of interest there of course!). It does rather remind me of what I’ve read about the Scientology “Personality Test” where everyone gets the same recommendation.

  • 17 dearieme January 6, 2018, 6:09 pm

    I was taken by the recommendation I saw on the internet recently, intended as a version of Harry Browne’s Permanent Portfolio.

    25% cash – but not necessarily GBP.
    25% equities – Far East and Pacific.
    25% bonds – US TIPS
    25% stuff – e.g. gold, silver, agricultural commodities ….. (no mention of bitcoins).

    Is there an Aussie equivalent to TIPS that can easily be bought in the UK? As a passive ETF or fund?

    What’s the simplest way to keep cash in Swiss Francs? Or Norwegian or Danish Krone?

    What’s the best passive ETF/fund for investing in the Far East (including Japan) and the Pacific?

  • 18 hosimpson January 6, 2018, 8:34 pm

    Vigilant planner.
    I do like to have a plan, but the description doesn’t sound right. Also it’s quite different from the results of some other tests I’ve taken (e.g. FinaMetrica).

  • 19 Mr Optimistic January 6, 2018, 10:15 pm

    @Egremont. Have you transferred a SIPP to another SIPP ? I am in the same position if so but want to transfer owing to charges and investment choice. Given the short timescale may just stuff 25% into a global tracker in the interim. Since the idea is to invest over a decent interval, in theory should invest now and then transfer into equivalent portfolio but not sure I can be bothered…or is it that I am trying to time the market and am hoping for a downturn in the interim? It’s my brain and even I don’t know 🙂

  • 20 WhiteSheep January 6, 2018, 11:02 pm

    Another vigilant planner (and INTJ!)

    It was fun but I am not convinced by the report – it also appears self-contradictory in several areas. (For instance, it tells me I am “prone to following the actions of others” in one section but my results are “low” on “Herd influence – Irrationally following the behaviours and advice of others” in a different section.)

  • 21 Egremont January 7, 2018, 9:54 am

    @MrOptimistic. yes, the pension was with phoenix life and invested in some sort of comedy enhanced deferred with profits plus unit thingies for which as far as I can see you could only get a current price once a year, so I cashed it in and moved it for a bit more transparency. And I am unashamedly market timing, I want to leave it in something cashlike and see where we are in the middle of the year. That leaves me 50/50 equities/ bonds and cash so I still capture some of any further gains.

  • 22 Mike Rawson January 7, 2018, 10:54 am

    I don’t think that Schroder’s quiz is very good.

    It said I was a tentative, over-optimistic crowd-follower. I’m really not, but more importantly, I can’t think of single answer I gave that suggested that.

    And the bias isn’t consistent, as it said I was very unlikely to panic, rather than saying I was anxious.

    Mike

  • 23 AAJ January 7, 2018, 1:02 pm

    “My second thought was no wonder my stock picking adventures have become increasingly stress-inducing over the past few years”

    You should also consider the context of your investments. Over the past few years, we have been a a massive bull market. In general, you can thrown a dart at a FTSE100 company, buy it and make money. I don’t understand how so many people can have so much anxiety whilst at the same time making so much money.

    OK, so I scored over-optimistic. However, being confident that the stock market will produce positive returns is statistically more accurate than being pessimistic. If there was a crash, as long as I have a job, my SIP would be greatly helped by a bear market. Its a win-win.

    “The future’s so bright, I gotta wear shades”

    AAJ.

  • 24 AAJ January 7, 2018, 1:06 pm

    @Mike Rawson The test is indeed flawed. The summary did not match what I entered or the graph it produced.

  • 25 PC January 7, 2018, 1:12 pm

    My top tip is

    Talk to an adviser
    As you lack investment confidence and can be a touch pessimistic, getting a professional to guide you could
    help calm your nerves and assist you in taking the
    necessary steps to achieve your investment goals.

    I had overlooked this completely until I saw the comments above. I’m sure one of the questions was about doing your own research, and I think I got the betting questions right .. their conclusion looks a bit suspect, although not surprising as that is the business they are in.

  • 26 Peter Keiller January 7, 2018, 1:13 pm

    I looked at my summary, looked at my scores and concluded there was little or no connection between the two.
    This is nothing more than a marketing tool from Schroders with not a jot of validity.
    I guess Monevator readers are unlikely to be drawn in, but please don’t think this ‘test’ has any meaning at all or describes your personality characteristics in any way. I suspect ‘The Donald’ would have been given a similar summary, and we all know that we’re not in the least like him!
    Andrew’s comment about the Scientology ‘Personality test’

  • 27 The Investor January 7, 2018, 2:32 pm

    @AAJ — Hi!

    You should also consider the context of your investments. Over the past few years, we have been a a massive bull market. In general, you can thrown a dart at a FTSE100 company, buy it and make money. I don’t understand how so many people can have so much anxiety whilst at the same time making so much money.

    In short, because I’ve not been interested in making money, I’ve been interested in being sure over multiple years that I can beat the market over time. I started a three part series on this, but got discouraged about writing about it and never continued:

    http://monevator.com/days-of-being-wild-part-one/

    Up until the end of 2016 I thought I might try to set up a fund or similar; for various reasons (not return related! 🙂 ) that avenue was not explored further. Before my years of obsessive tracking I was a very low-stress investor, even as a stock picker — for instance I’d only check in every month or three, even though I had most of my net worth in individual companies.

    I’m supposed to be nudging back towards that in 2018. We’ll see! Perhaps I’ll finish that series.

    Anyway, I had thought that was why I was scoring for anxiety, but with almost everyone else getting the same result I tend to believe the more cynical theories about this quiz might be correct!

    On the other hand we’re a pretty self-selected skew of the population here…

  • 28 Adrian January 7, 2018, 4:27 pm

    I took the test and came out as an anxious cautious investor which surprised me a little.

    IMO the test confuses gambling with investing.

  • 29 Claudia January 7, 2018, 5:17 pm

    Vigilant planner and INTJ here – although I have to say that I see my tiny investments more like a gambling playground than the fruit of vigilant planning. I don’t feel as if I know what I am doing, and therefore treat the invested sum as lost money from the very beginning. This lets me face my bad investments with a calm and collected mind.
    I guess that I wouldn’t be so calm if the invested sum would already be existential/moving closer to the goal of financial independence. Something I have to prepare myself for!

  • 30 Hospitaller January 7, 2018, 5:45 pm

    The test defines essentially rates me as a lunatic, and so is quite probably accurate.

  • 31 Underscored January 7, 2018, 11:44 pm

    Myers Briggs has no empirical basis. The big five however… https://en.wikipedia.org/wiki/Big_Five_personality_traits

  • 32 Mathmo January 8, 2018, 1:54 am

    Happy New Year all. I’m not taking that quiz — that probably classifies me already in one of the boxes…

    The withdrawal rate calculator mentioned above is fascinating. Arguably not far enough back in terms of data set, but interesting to fiddle with and test your mettle.

    Really like the CAPE graphs. That and the 12 months consecutive S&P rises. I really enjoyed the “highest ever” headlines on Dec 31. Had a real turn of the millenium feel about it. This time is different. The world isn’t as bad as it looks. My dry powder is looking increasingly expensive but oh-so-very dry.

  • 33 Steve January 8, 2018, 9:48 am

    I know this is petty, but I feel uncomfortable about taking advice from a company that doesn’t know what “normal 6-sided dice” look like.

  • 34 The Investor January 8, 2018, 10:29 am

    I feel uncomfortable about taking advice from a company that doesn’t know what “normal 6-sided dice” look like.

    I took this to mean an unbiased dice (i.e. not a ‘loaded’ dice where one or more numbers is more likely to come up than others, due it being tampered with in some way).

  • 35 Steve January 8, 2018, 11:54 am

    @Investor: I took it to mean a “standard” dice – with 1 opposite 6, 2 opposite 5 & 3 opposite 4, but yes – other definitions of “normal” are available.

    If my friend pulled out dice looking like the ones illustrated, I’d turn down the bet simply because his dice look a bit “special”. 😉

  • 36 The Rhino January 8, 2018, 12:49 pm

    @underscored – just did truity.com, results seem less of a narrative than 16personalities, but the traits covered seem similar? Doesn’t give you a type to go and bandy round the interwebs, which is an obvious drawback 😉

  • 37 AAJ January 8, 2018, 2:09 pm

    “…with almost everyone else getting the same result”

    @The Investor
    Most investors are anxious, test or no test. The past 5 years has headline after headline detailing how the next bust will happen and that we should be worried. Year after year there was no bust, but anxiety kept growing.

    For passive investors, 2018 will most likely be another good year. If, in the rare case there is a crash, then a lot of people will still gain from lower asset prices. Only those approaching retirement will lose out, but people with 30 year horizons will still poo their pants when they should be jumping for joy.

    I worry about other people worrying. It may make the next run the the exit far quicker if everyone has their running shoes on.

    I’m not a good investor by any measure other than last year’s returns. I am naive enough to believe my bearded yoga instructor when he says the future is just fine.

    p.s. you should finish the series

  • 38 Scott January 8, 2018, 2:21 pm

    I wish I’d known you had to give them an email address, before I’d answered all the questions!

  • 39 UK Value Investor January 8, 2018, 3:11 pm

    Apparently I’m a Level Headed Optimist, which sounds like a reasonable description (although I don’t think I’m particularly optimistic).

    It also says I tend to follow others and can be overoptimistic, which I think are way off.

    I’d give it a four out of ten. But then again, uncovering the inner workings of somebody’s personality from a quiz was always going to be a tall order.

  • 40 The Investor January 8, 2018, 3:56 pm

    @Scott — You don’t need to in order to get your results, just make something up. The results are given after that screen.

  • 41 Factor January 9, 2018, 2:13 pm

    @TI – “….. just make something up …..”

    Which is exactly what I did.

  • 42 JimJim January 10, 2018, 7:48 am

    Looking at the profile I was given, and reading all your comments, I can only conclude that a clever marketing person needs to look at our personality types to then cast doubt into our minds that we have the capability to invest… so they can then say “leave it to the professionals sonny” and sell more funds. After all that’s what I would do if I were trying to make money.
    I wonder why I didn’t come out as more sceptical in the quiz??? HA! It must be wrong!

  • 43 Atlantic Span January 10, 2018, 11:26 am

    I go with Jack Bogle’s view on investing quote nobody knows nothin’ unquote.
    I own my age in cash and an intermediate term gilt tracker split 50/50 and the rest in a global equity fund.It’s worked out quite well thus far.

  • 44 Curious January 10, 2018, 7:00 pm

    The FT article on Corbyn mentions very little on asset confiscation and nothing on capital controls which really gives me the willies.

    Can you imagine how a confiscation would work on a vanguard world ex uk tracker? Perhaps it would make a difference if the fund was domiciled in ireland as some of the vanguard funds are. Obviously you would not be able to put any new money in.

    I think delaying any forced repatriation/confiscation would be key. Hopefully vanguard would fight our corner long enough for a more moderate government to come in.

  • 45 The Rhino January 11, 2018, 5:48 pm

    @AS – “I own my age in cash…” would that be in £s or pence? Glad its working out for you..

  • 46 xxd09 January 12, 2018, 10:55 am

    Hi Atlantic Span
    My philosophy entirely-now 18 years into retirement-70+
    Rode out a few financial crashes-ready for the next one-imminent?
    I won’t now go below 30% in equities -Global Equity tracker
    Just 5% in cash -rest in Hedged Global Bond Tracker
    Cash amount maybe a bit low if next crash lasts more than 2-3 years before recovering but older now and slowing down
    Portfolio larger now than when I started out!
    Let’s me sleep at night plus do other things than constantly check my finances
    2 funds only-even my financially disinterested wife can follow that!
    Truly almost a “fire and forget” system-many thanks to John Bogle
    His latest book is out-The Little Book of Common Sense Investing-10th Ed
    Almost biblical in value to investors!
    xxd09

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