I would struggle to pick my favourite Morgan Housel article – I was already a fan back in his Motley Fool days – but he just posted another.
Urging investors to play their own game, Housel says:
Someone recently asked how my investment views have changed in the last decade.
I said I’m less judgemental about how other people invest than I used to be.
It’s so easy to lump everyone into a category called ‘investors’ and view them as playing on the same field called ‘markets’.
But people play wildly different games.
If you view investing as a single game, then you think every deviation from that game’s rules, strategies, or skills is wrong.
But most of the time you’re just a marathon runner yelling at a powerlifter.
So much of what we consider investing debates and disagreements are actually just people playing different games unintentionally talking over each other.
As Monevator’s resident naughty investor who finds it hard to write freely on his own blog these days, I hear you Morgan.
Of course that’s my choice. I believe most people should be passive investors. So I’m wary of leading the wrong people off the right path.
Still, we’re big fans of do it yourself investing around here. For me that starts with realizing there’s no one right way to be an investor.
Lots of people have insights to share – even if it’s just to reinforce why you’re doing it your way. And soon we’ll bringing you some of these additional perspectives, courtesy of our very successful call for new writers a few weeks ago.
For now, have a great weekend! Only three sleeps to go until we can eat under a strange ceiling, like civilized human beings.
From Monevator
Are bonds a good investment in 2021? – Monevator
Investing for beginners: Risk, returns, time, and diversification – Monevator
From the archive-ator: Seven reasons why you shouldn’t start your own business – Monevator
News
Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1
OECD calls for higher inheritance tax after pandemic – Guardian
Monzo to offer paid leave after pregnancy loss – Guardian
AirBnB sees surge from staycations and vaccinated boomers – ThisIsMoney
Hostile UK border regime traumatizes visitors from the EU – Guardian
Exodus of EU truckers leaves UK hauliers facing shortages [Search result] – FT
Eviction ban to end 1 June: what it means for renters and landlords – Which
Meet the academic who fired up moonshot investing [Search result] – FT
Products and services
TSB launches two-year fixed mortgage with a rate below 1% – ThisIsMoney
Why Britons have been buying woodland during the Covid crisis – Guardian
Bitcoin’s waning dominance stirs warnings of crypto market froth – Yahoo
High Street names pledge to keep taking cash at their tills – Which
Sign-up to Freetrade via my link and we can both get a free share worth between £3 and £200 – Freetrade
Thematic ETFs are booming in today’s manic market – Axios
Counting the cost of your lockdown subscription services – ThisIsMoney
Homes for sale near theatres, in pictures – Guardian
Comment and opinion
Perspective – Indeedably
UK property is booming, but nobody has noticed [Podcast] – Property Hub
Four investing lessons from David Swensen – Of Dollars and Data
Let’s talk about inflation – Pragmatic Capitalism
Trust fund kids are not taking over the world [Search result; disagree] – FT
Individual stocks have crashed while the US market soars – AWOCS
Beware of sci-fi portfolios – ETF.com
Ermine’s hybrid rant/review of Die With Zero – Simple Living in Somerset
Women and financial literacy: more uncertain than not knowing [Research] – SSRN
Expensive US market mini-special
Various ways in which the US market looks pricey these days – Validea
Howard Marks finds nothing to buy in expensive market – Bloomberg via Yahoo
The US CAPE ratio is very high and it will matter… – The Irrelevant Investor
…which is why it makes sense to take action now – Compound Advisors
Naughty corner: Active antics
Fund managers can be ‘nudged’ into outperformance – Institutional Investor
Our best investments are often down to luck – Humble Dollar
Larry Swedroe: SPAC or SPAM? – Evidence-based Investor
Covid corner
England will ‘flex’ Covid vaccinations to tackle Indian variant, says minister – Guardian
Why getting vaccinated is more popular in the UK than the US – Vox
The NHS Covid legacy: long waits and lives at risk – BBC
Hankering for a hug? A guide to post-lockdown greetings… – Guardian
…and sex – Guardian
Kindle book bargains
What It Takes: Lessons in the Pursuit of Excellence by Stephen Schwarzman – £0.99 on Kindle
Radical Candour by Kim Scott – £0.99 on Kindle
Hired: Six months undercover in low-wage Britain – £0.99 on Kindle
The Future Is Faster Than You Think by Peter Diamandis and Steven Kotler – £0.99 on Kindle
Environmental factors
How cities will fossilize – BBC
The contradiction of mining for a green energy revolution – New York Times
Tesla suspends Bitcoin payments, cites fossil fuel concerns – Coindesk
Gresham House Energy: batteries included – IT Investor
Off our beat
Selling hours – Seth’s blog
Efficiency is the enemy – Farnam Street
Two days a week is perfect for working from home – The Atlantic
The economics of movie product placement – The Hustle
The great online game – Not Boring
College is a ruthless competition divorced from learning – The Atlantic
And finally…
“When you look at the results on an after-fee, after-tax basis, over reasonably long periods of time, there’s almost no chance that you end up beating the index fund.”
– David Swensen, Unconventional Success
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> As Monevator’s resident naughty investor who finds it hard to write freely on his own blog these days
Go on. Knock yourself out 😉
My mustelid younger self enjoyed ’em. And the gave me hope in the face of adversity
Control to ermine. You are stuffed. You will ditch. Out
Monevator
Who isn’t buying the market right now
Worked for me 😉
> As Monevator’s resident naughty investor who finds it hard to write freely on his own blog these days
You’ve raised this issue a couple of times – why not start a sister blog, Monevator Active? Seems the simplest solution, and you can plaster it with here-be-dragons warnings if that floats your boat!
Agreed, we are all different. and @Ermine, Nice article, how you had time to read the book and write so extensively on it in such a short time amazes me. I look forward to having that much time soon – a great read and thanks.
I was expecting a few more VIX articles after this last week… https://www.bloomberg.com/news/articles/2021-05-10/a-signal-in-vix-underbelly-flashes-a-green-light-to-stock-bulls
JimJim
I’ve noticed the property bubble. Was glad to sell my home last August and move into new one. Bird in hand vs 2 in the bush and all that. I’ve sat with the cash in the bank since then and watched its spending power be eroded away. The property would probably have sold for 10% more in this crazy market 🙁
There are many ways in investing of reaching the same outcomes
“many roads to dublin “
Fascinating and a learning process to read about how others have achieved their goals
A financial blog that cover newcomers right through to more sophisticated types is remarkable
When I was starting out investing the Bogleheads forum was the best I could find -now a U.K. version is in place as well
Great work Monevator
xxd09
@jim if it’s any consolation, I’ve been repeatedly wrong about the UK property market for almost 2 decades. Almost to the point where it’s useful. The only thing I’ve learned is that it’s highly irrational. I thought it was overvalued/bubbly in the years up to 2002-4, stayed out. Then finally bought in 2007 to sell again in 2012 flat/v small profit, only to see the value of the property I had sold then soar a couple of years after. In fact, if you did the opposite of what I recommend then you’d make a tidy sum… and right now I’m sitting tight like you! Hey ho!
>> Daniel Kahneman once told his financial advisor that he had no desire to become richer; he just wanted maintain a lifestyle he was satisfied with. She told him, “I can’t work with you.”
Yet another reason to avoid the entire “advice” industry, when they can’t even understand the motivations of the people they’re meant to be helping.
Re: An Admirer
Yes like you I’ve dropped a few clangers. Sold properties, sat on the cash only to see them re sell 2 years later for 20% gains. I can’t complain overall as i’ve made some money building houses but it does seem very frothy atm.
I don’t subscribe to this whole 18 year market cycle with property though. How can something with so many variables (help to buy, SDLT holiday, credit crunch 2008) follow a neat 18 year pattern. Surely there has to be a catalyst for movements.
“OECD calls for higher inheritance tax after pandemic”: Nice idea but a) IHT is far too easy to avoid b) the only way to make it work in the UK is go after property but that’s a massive vote loser so won’t happen. I’ll continue to make plans to pay zero like everyone else.
“Trust fund kids are not taking over the world”. The IFS report doesn’t actually say that. Chris Giles is clutching at straws. Another reason I never read the FT.
“UK property is booming, but nobody has noticed”. How could you not notice? Properties in my area of the commuter belt are up 15% over just 12 months. Ramping property and allowing developers to make a killing is pretty much the only idea this govt (or any previous one tbh) ever has.
Thanks again @TI, I think the points about playing your own game are very relevant at the moment. Please keep writing about the active side of things, it is really invaluable when seen in the wider picture. I think there are many ways to skin a cat and all that.
A mate of mine is one of those who has recently got into crypto. I have no idea if he has other investments. He’s never mentioned it before. I could only advice caution, but who I am I do say if it the right thing for him or not? Buyer beware, etc.
My approach is somewhere in the middle between some active and mainly passive, concentrating on having a core of Vanguard Lifestrategy 80, plus other small cap, gilt and property indexes, plus in time a smaller collection of funds and investment trusts, and on top of that a little bit to ‘play’, but mainly avoiding individual shares. It’s the best approach for me on balance I think, but obviously this won’t necessarily work for others.
I am however convinced a number of bubbles will pop soon, but my approach will stay the same. Noticed a lot of people who don’t normally talk about ‘investing’ suddenly taking an interest, adverts for non regulated platforms and bitcoins on buses, the GameStop saga, the increase of house prices due to the stamp duty break, lots of signs out there, but really, who knows? (As someone who is looking to move in around 12/18 months, we’re holding off for now – is that the right thing, who knows? I don’t – the same with shares and market timing etc – no point worrying about something you can’t control as long as you are getting the basics right and understand risk, diversification, cost of fees and long term plan).
Circumstances definitely vary – my position as a homeowner with a DB pension which in my mind is like owning likers far in excess of the mortgage means I’m effectively very underweight equities and have high risk tolerance for my equities, and nomatter how much I pump into sipp&Lisa I can’t catch up. Being employed with 1 employer also means I’m safer if I can diversify my income as quickly as possible.
A rich person who is all portfolio and maybe trying to reduce volatility would be quite different, likewise a homebuyer would be more cautious and if you don’t have a DB you need caution.
How you achieve safety can be different – I tolerate volatility today to grow to safety later – all you can do is shift risk around.
Theoretically too if all assets are perfectly priced it also wouldn’t matter too much if you aren’t perfectly replicating the market, as long as you’re diversified and low cost and disciplined – so you can almost just select a part of the perfectly priced market with the level of risk you want to take.
Also I want FI for safety, but I’m not so hot on RE, and I’m flexible about when that is, some people build up a lot of expectation into a fixed age and a fixed income.
Also to some degree I invest because I don’t have anything better to do with the money.
You can also invest for ethical reasons – more sustainable than charitable donations.
This Febuary I offered on a house for the first time in my life. A month later I stopped shopping. Need more time to catch up to the 25% price increase. More likely it’ll be a combination of saving for another year, and buying less – a 2 brm flat instead of a 3 brm house. Lifestyle deflation!
One of my kids is buying a flat in Balham, SW London (Gateway To The South) and has been stuck in a chain since January. I have been on the lookout for alternatives if the purchase fails to go through and have noticed rising asking prices even over that short period, driven partly I think from a lack of supply. Not a single alternative has appeared on the market that matches her (fairly undemanding) criteria without serious flaws. Even the property with serious flaws seems to be shifting.
I am passive when it comes to equities, but active on driving down costs, cash management and understanding how to get the best from the tax rules we have.
One active punt – I am short S&P 500 puts, expiring September. As the article linked to by @JimJim has pointed out, implied volatility is currently very high, enough to make bets on way out of the money options worthwhile IMHO. Provided the steamroller does not come along of course. Off to Scotland in a week’s time so will likely close out the bet next week.
@Naeclue… Balham: Gateway to the South… Only at Monevator do we reference Peter Sellers as a guiding light (red, amber, green, back to red – to take the next line from this 1960s sketch)
@Learner — A 25% house price increase is a nightmare for a first-time buyer. You have my sympathies! This was me from the late 1990s to the mid-2000s – near annually it felt like — with the addition of perpetually being slightly too ambitious with what/where I could buy and also suspecting London property was overpriced. (Eventually I was sure of it, which knocked me out for another decade-plus. Oops!) Clearly I’ve no good advice, just a virtual cup of tea and a biscuit to offer. 🙂
@all — Thanks for the comments!
Referencing Peter Sellers, I hope @Naeclue’s kid is buying a flat in posh Bal-ham, not plebeian Ballum.
Second guessing house prices seems to be impossible, particularly in London. But that hasn’t stopped it becoming a national pastime.
@TI – Thanks for the commiserations 🙂 I could grumble about property all day but I really try to keep a lid on it most of the time. Sensitive topic. Hard to completely ignore though, being by far the largest factor in [my] retirement planning.
After 30 years in the property market and having bought three and sold two. I can honestly say that after repairs and maintenance, on paper I am slightly up on the game. Add in the rent I now don’t pay and I am certainly up. But. Two of the properties sold at a loss or break even on the purchase price (bought 1991 and 2007) and the third I will probably never realise any gains (although my offspring might).
It’s just somewhere nice to live, and I would now tell my younger self to be pragmatic about making money off property. If you intend or tend to move around in life a lot – rent.
JimJim
@JimJim I would have been much better off with the flexibility of renting apart from the fact that the rental market is so dysfunctional in the UK. I didn’t want to be sending may kids to school and at the same time worrying that an amateur landlord could kick me out on a whim.
@ Ducknald Don
> worrying that an amateur landlord could kick me out on a whim.
Nail. On the head. Hit.
Everyone with a BTL on here will crucify me, but IMO amateur landlords are a major source of the problem in the UK. It has been thirty years since I last had dealings with this pond-life, but the problems seem to still remain
I still recall the pillock that tried to kill us because it was so much easier to wire the electric shower on the top floor off the lighting circuit, the rubbish ‘reasons’ given for withholding the deposit – if I’d rented any longer I’d have made a point of smashing up a deposit’s worth of stuff just to at least get something for my money.
Back in the day we accepted that some families were too poor to find the capital to buy a house. Ever. And councils rented and in many cases built the damn things. Half the kids in my grammar school lived in council houses.
And then the marvellous Margaret Thatcher sold this capital below cost of buy votes, because giving away free money makes friends think well of you. People used to moan about council houses, but they were at least professional landlords and they did mend things eventually.
And pretty much ever after Thatcher governments have bought votes by immisserating the next generation of wannabe homebuyers, by showering the current owners with money. Lest I be charged with being a bleeding lefty one of the most egregious interventions was the massive increase in BTL mortgages in the New Labour years, which brought an ever increasing stream of these amateur landlords out of the woodwork like cockroaches, because you didn’t need to be minted enough to be a landlord, just get a loan
As the Wikipedia article on buy to let starts off with
They knew a thing or two back then, eh? There a strong argument that a good rental market would fit modern working patterns much better.
> As Monevator’s resident naughty investor who finds it hard to write freely on his own blog these days
I would genuinely like to see an article written about options and margin trading in depth? Maybe it’s anti-british but why aren’t more FIRE blogs writing about covered calls etc? Do you dabble in the black arts but aren’t willing to tell us?
Unlike the bogleheads perspective, it’s almost like owning a property and not renting it out.
and before the r/wsb crusaders jump in.. read firevlondon where he bought his house on margin at half the cost of a normal mortgage. With those savings you could eat as much avacado toast as you want 🙂