Good reads from around the Web.
You might find it strange to read on Monevator a slight sniffle on news [1] that the CME Group in Chicago is going to close most of its futures trading pits.
After all, shouting incomprehensible phrases while pushing and shoving and sticking two fingers up at the person next to you is the stuff of a Saturday night out in Blighty, not the kind of sober-minded investing we espouse around here.
But in truth I’ve long been attracted to the romance of the markets. I admit that unlike my die hard passive investing [2] co-blogger, I’m partly an active investor [3] for that reason.
I mean, one of my favourite investing books is Reminiscences of a Stock Operator [4]
(Of course I’m well aware of the downsides [5] of excitement in investing, too…)
Buy buy buy! Sell sell sell!
Doesn’t everyone love this scene in trading places?
Here’s a few eloquent words [6] from somebody who knew the trading pits (which incidentally disappeared from London with the financial Big Bang back in 1986):
The floor was the place for dreamers. It was the place for entrepreneurs, because that’s what independent traders really were. It was a place where a guy that never graduated from high school but had his wits about him, and a high appetite for risk could make a living. Some even got rich.
The floor was a place for everyone and anyone. It was like America, democratic. All walks of life. All you needed was enough money to rent a seat and you were a trader. No special qualification or certification. No degree. Sure, there were cliques. It was clubby. Not everyone was ethical. Not everyone liked everyone else. There were fights. But, the floor reminds me of startup companies today.
The floor was a constant vaudeville show. Colorful. Frenzied. Loud. Smelly. Smoky. It was on the run entertainment from 5AM to 4PM. Every day. Tourists would come like the zoo, stand behind thick panes of glass and point at the animals.
The floor was an economic engine that built all of the cultural institutions in Chicago. All of them. They have roots in the floor. The banks that line LaSalle Street are here for one reason. Chicago would be nothing without its exchanges. Fortunately we made the right choices in the late 1990’s and Chicago still has its exchanges. The city and state would be in even worse shape without them.
But maybe most of all, the floor was about hope. It was a place where you could realize some of your wildest dreams. You could go from electrician, cop, milk man, farmer, military, to wealthy trader.
You and I know that sensible investing for your retirement is about rebalancing a portfolio [7] of index tracking funds.
But nobody is ever going to make a movie about that.
Have a good weekend!
From the blogs
Making good use of the things that we find…
Passive investing
- The centre of gravity for retirees – Rick Ferri [8]
- Fund managers don’t beat market with their own money, either – CRR [9]
- What happens if factor investing /Smart Beta gets too popular? – AWOCS [10]
- The trouble with currency-hedged index funds – Canadian Couch Potato [11]
Active investing
- Get a GRIP when stockpicking – Clear Eyes Investing [12]
- Cashflow is king – The Escape Artist [13]
- Where in the world are the cheap stocks? – Alpha Architect [14]
- Does discounted cashflow analysis really work? – Musings on Markets [15]
- Meet Ben Graham’s Mr Market – The Sova Group [16]
- Beware of back-tested strategies – The Value Perspective [17]
Other articles
- Bankers, bonuses, tumbleweed, hookers – Under the Money Tree [18]
- Increase earnings to bring financial independence closer – RIT [19]
- Why some retirees choose dividends for income – Simple Living in Suffolk [20]
- Alternatively, how about a Smart Beta fund? – Maven [21]
- A bare-all on expenses, plus a spreadsheet you can use – FIREStarter [22]
Product of the week: Want to boost the savings rate on your cash ISA? Check out this table [23] of the best contenders courtesy of The Telegraph.
Mainstream media money
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 of that site.1 [24]
Passive investing
- Ferri: How my daughter learned about stock market crashes – WSJ [25]
- Sizemore: Every investor should own REITs [US but relevant] – Tumblr [26]
- Buffett’s $1million bet pays off as index funds beat hedgies – Fortune [27]
Active investing
- Nestle’s bond yield has gone negative – Washington Post [28]
- Seth Klarman: What I’ve learned from Buffett [Search result] – FT [29]
- The future of iron ore – Motley Fool Australia [30]
- Shareholder value is an outcome not an objective [Search result] – FT [31]
- Neil Woodford is launching an investment trust – ThisIsMoney [32]
- The biggest companies tend to lag the market – Market Watch [33]
- Man wants bonds to be more complicated [Nerdy] – Bloomberg View [34]
Other stuff worth reading
- What do negative yields in Europe mean for investors? – WSJ [35]
- …cheaper fixed-rate mortgages for one, even with small deposits – Guardian [36]
- Crowd-funding for the buy-to-let crowd – ThisIsMoney [37]
- 41 things I’ve learned about investing – Motley Fool US [38]
- Carl Richards: On standing apart from the herd – New York Times [39]
Book of the week: I haven’t read it yet, but Hipster Business Models [40]
Like these links? Subscribe [41] to get them every week!
- Note some FT 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”. [↩ [45]]