What caught my eye this week.
Welcome back and Happy New Year! I hope you got just what you wanted for Christmas, and that you continue to get what you want for the rest of the year.
Well, just so long as what you want includes a sufficiently severe enough case of investing obsession to keep you coming back to Monevator throughout 2025.
Of course if you’re reading this article – and it’s not because you were sloppily Googling for old Mr Motivator videos to kickstart your fitness goals – then you’re probably already a bit of an investing nerd.
And that makes you unusual. Indeed I can’t remember a time when most people were less interested in shares.
If I allude to Monevator when meeting new people then I usually get more questions about crypto, side hustles, or buy-to-let than anything about the stock market.
In contrast, 20 years ago there were investing programmes on daytime TV and realms of coverage in the business pages.
That’s mostly all gone – and TikTok videos about YOLO-ing into MicroStrategy shares are a poor substitute.
A land of unbelievers
To the extent that this all reflects a sober move towards passive investing, I can hardly complain.
I might be a stock picking nutter but that’s not what I believe most people should do.
And while my co-blogger The Accumulator can bore for Blighty on the 4% rule – seriously, don’t get trapped with him in the kitchen at a party – index fund investing is largely set-and-forget. There’s not much to make a TV show about.
However I don’t believe the eerie quiet really reflects a nation secretly growing rich on their global trackers.
The Financial Times just published data from Abrdn (sadly that’s not a typo) showing Britons have the ‘lowest appetite’ in the G7 when it comes to stock market investing:
Okay, we are doing well for investing in pensions. So perhaps there is a bit of slow and steady compounding in retirement accounts crowding out the enthusiasm for shares I recall from the past.
Moreover, the FT explains the sky-high US allocation to directly owning equities partly reflects that it has so many more very wealthy people. In contrast those of moderate means prefer to invest in housing.
Not that the US becoming so much richer than us is a comfort. But it is another story.
Spread the word
However you interpret this data, I think it’s a shame so few directly invest in equities.
Investing in the stock market made me financially independent in 20-odd years without a rockstar income.
And while there was certainly plenty of hard saving and a bit of luck (or even – cough – skill) in the mix, I still believe snowballing your way to financial freedom via the stock market is an aspiration open to everyone, not just the rich.
If you do too then let’s spread the word to more of our countrymen and women in 2025.
I’ll do my bit with this website. But how will you get your friends and family to tune in?
Besides regularly sending them Monevator articles, I mean.
Let us know in the comments, and have a great weekend – and a great year.
p.s. A quick thanks after dozens of new Monevator members signed up following my Christmas post. I’m a bit flummoxed as to why this call to action did so well, to be honest. But my hunch is the stream of generous comments from existing members played a part. Social proof is a powerful force and reading so many people saying nice things probably reassured a few more into joining us. So thank you!
From Monevator
Amateur activist – Monevator [Mogul members]
From the archive-ator: The most important goal for every retiree – Monevator
News
Note: Some links are Google search results – in PC/desktop view click through to read the article. Try privacy/incognito mode to avoid cookies. Consider subscribing to sites you visit a lot.
IFS’s Paul Johnson says higher mortgage rates here to stay – This Is Money
Post-Christmas blues as bosses try to reverse hybrid working – Guardian
Over-60s taking out student loans they’re ‘unlikely’ to ever repay – i Paper
Premium Bonds saver scoops £1m on first-ever prize draw – This Is Money
“There aren’t enough jobs for everyone”, says recent law graduate – BBC
British start-up attacks LSE as it reveals plan to delist… – Telegraph via Y.F.
…after UK market sees £145bn of companies go in takeover frenzy… – T.I.M.
… though London is not the only shrinking stock market – FT
Selling heat pumps across Germany’s political divide – Guardian
Products and services
Best packaged bank accounts – Be Clever With Your Cash
Six ways to take control of your pensions in 2025 – Which
Get up to £1,500 cashback when you transfer your cash and/or investments to Charles Stanley. Terms apply – Charles Stanley
Beware of offers to open betting accounts in your name – Guardian
Is it worth shopping around for gas and electricity again? – Guardian
First Direct switch offer: get £175, plus cashback – Be Clever With Your Cash
How to return unwanted festive gifts – This Is Money
Monzo makes viral ‘1p challenge’ official with £668-a-year feature – T.I.M.
Open an account with low-cost platform InvestEngine via our link and get up to £100 when you invest at least £100 (T&Cs apply. Capital at risk) – InvestEngine
Homes for sale in remote parts of Britain, in pictures – Guardian
Comment and opinion
Global diversification is still working – Cullen Roche
Three improvements for 2025 – Fortunes & Frictions
IHT raid on pensions puts millions at risk of poverty in later life – T.I.M.
The millionaires living the ‘underconsumption’ life – Yahoo Finance
This couple retired in their 30s in 1991 and have no regrets – CNBC
Secrets of an airline points millionaire [Search result] – FT
Are millennials right to accuse boomers of hoarding? – Slate
Labour’s pension reforms are based on flawed analysis [Search result] – FT
Spend to live, save to die – A Teachable Moment
Forward motion, not retiring – We’re Gonna Get Those Bastards
Predictions and forecasts mini-special
12 things that probably won’t happen in 2025 – A Wealth of Common Sense
Marketing, masquerading as investment expertise – Fortunes & Frictions
30 years ago Tomorrow’s World predicted 2025. How’d it do? – BBC
Scientist’s ‘ruthlessly imaginative’ predictions from 1925 mostly came true – Guardian
Forecast mostly gloomy, but that’s a good thing [Search result] – FT
Naughty corner: Active antics
On dividends and stock price fluctuations – Dividend Growth Investor
MicroStrategy mania exposes rare fault line in ETF industry – FT
Ten cheap US wide-moat stocks for 2025 – Morningstar
Stock picking hedge funds post highest average returns since 2020 – Reuters
Owning one BTC is better than being a millionaire – Bitcoin Magazine
Kindle book bargains
The Black Swan by Nassim Taleb – £0.99 on Kindle
The Simple Path to Wealth by J.C. Collins – £0.99 on Kindle
Number Go Up: Inside Crypto… by Zeke Faux – £0.99 on Kindle
Side Hustle by Chris Guillebeau – £0.99 on Kindle
Environmental factors
Insects flourish in restored habitats on solar energy farms – Bird Guides
UK needs to ban full hybrid cars by 2030 says motoring body – Guardian
Hakai’s last post [another great indie site goes R.I.P.] – Hakai
Nine stories that prove not all hope is lost for the climate – Vox
Robot overlord roundup
‘Godfather of AI’ shortens odds of it wiping out humanity – Guardian
Can France become an AI powerhouse? [Search result] – FT
AI-powered OnlyFans rival launches in London with £3m funding – T.I.M.
Origin stories mini-special
Morris Chang and the origins of TSMC – Construction Physics
Better Man and the origin of Robbie Williams – Roger Ebert
Leonid Radvinsky and the origins of OnlyFans – Reuters
Off our beat
Four questions – Humble Dollar
UK’s biggest ever dinosaur footprint site unearthed – BBC
77 mind-blowing facts from The Atlantic’s 2024 – The Atlantic
America has lost control of bird flu – KFF News [h/t Abnormal Returns]
Why thousands of Hongkongers have moved to the Midlands – BBC
Repetition tricks the mind into thinking a thing will last forever – Guardian
And finally…
“Churchill sent Keynes a cable reading, ‘Am coming around to your point of view’. His Lordship replied, ‘Sorry to hear it. Have started to change my mind’.”
– Philip Tetlock, Superforecasting: The Art and Science of Prediction
Like these links? Subscribe to get them every Friday. Note this article includes affiliate links, such as from Amazon and Interactive Investor.
Happy new year all. A timely reminder that passive investment is the best way to increase wealth. Having been a reader of this site for a number of years I have dabbled with both active and passive investment. Over this time I have learned the hard way (i.e. using my own money) that I am not an investing genius and any time I have beat the market was largely down to timing & luck. The key lessons I have learned via this site are
(1) Invest in index trackers
(2) Diversify within your risk profile
(3) Keep costs down. Fees erode profits over time
(4) Monthly investments helps make investing a habit
(5) Don’t meddle too much with your allocations
Based on these my annualised return over the last 10 years have been around 9% which might not be the best but works for me.
Thanks for all your work on Monevator. Only discovered you a year or so ago. Up till then, I’d moved into investing by necessity, wanting to ethically invest my pension 7 years ago and finding very little options rather than doing it myself with a SIPP. After many years of disappointing sub-5% returns (and momentary sky-high ones following clean energy ETFs’ peaks around the turn of the millennium), I decided a more passive approach would make more sense if I wanted to semi-retired at 57. I wonder if you’ve ever done any analysis on ESG-focused portfolio returns compared with non-exclusionary portfolios? I’ve resigned myself to never hitting double-digit annual returns as part of the deal with avoiding the uber-profitable fossil fuel and military hardware corporations. But I’ve also resigned myself to not being able to avoid any unethical investment with tracker funds, which have allowed me to increase my returns to around 7% this year. (And in all honesty, are any publicly-listed companies that are necessarily of a larger size with shareholder maximisation written into their DNA ever going to operate entirely ethically?) Anyway, be interested to know if others got into self-investing for similar reasons and what you think the realistic returns for such an approach are.
The FT chart is an interesting one as it shows the difference between countries, but as always, the differences within countries are probably greater.
The UK has had a property obsession as the only way to invest/get rich/aspire to for as long as location, homes under the hammer, a place in the sun, and grand designs have been on TV.
20+ years ago there were investing shows on TV (my fave working lunch) and Holiday shows (which didn’t involve some dour couple from Didcup wanting to buy a villa in Spain.
Anyway, the ONS have handily shared with us what each decile across the wealth spectrum have their money and property wealth is essential to not be poor (and avoid the pottersville rental poverty trap) – but if you want to be rich, you need to invest.
The lesson should be obvious – but a nation can’t become rich by inflating property wealth – and it’s maybe no surprise that the smart money invested is not in the UK markets (global/US ETFs all the way to prosperitay!
https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/totalwealthingreatbritain/april2018tomarch2020
” I can’t remember a time when most people were less interested in shares.”
Neither can I. It’s property, US tech stocks or crypto, because that’s what’s gone up the most in recent years.
My son’s business studies teacher wanted to teach the class about “investing”, so he put £20 into Dogecoin (!) and keeps the class updated on how it’s doing. I kid you not. That is about the worst “investment” lesson he could give. Dogecoin went up about 500% in 2024, so when I talk to my son about a 5% dividend yield and 10% annual total returns being good, he thinks that’s a waste of time. Well done teacher.
I don’t think we’ll see a meaningful upturn in individual investor interest in equities (and especially UK equities) until (a) the UK economy picks up, (b) the UK housing and US stock market bubbles burst or deflate and (c) the UK stock market strings together a few years of double-digit returns (as most people are momentum investors).
Let’s hope all of that happens sooner rather than later.
Had to learn about investing the hard way as a self employed professional or would have had no pension provision!
Now 78 so it’s been a long learning curve-discovering indexing finally got me over the line and made investing life less exciting but more successful – let this conservative investor sleep at night as a welcome side effect!
The recent IHT raid on private pensions was fair enough but a bit of a scunner investment wise -however in a fit of pique I went out and bought a new car,an expensive necklace for my wife and paid for this years Christmas accommodation for my kids-will this reduce the new enlarged IHT bill?
Now that’s out of my system I can relax again,leaving my investments well alone and hope the Trump effect will continue to fuel the Stockmarket rise via those pesky index funds
xxd09
HNY all at monevator. Thanks for the great work in educating people in investing and raising awareness. Much appreciated.
On investing I have personally found myself more hesitant as my savings and investments have grown. I’ve started from scratch, worked hard to save and the value swings are now more sizeable (and therefore scary to me!).
I know the investment swings are valuation noise, and only the buying and selling price really matters but it does make me hesitant to invest in equities vs sitting in cash. Thought it interesting the percentage of cash the FT graph suggests the japanese hold, perhaps a hang up from the past.
I get the inflationary devaluation of sitting on cash.
Have any other readers experienced this and any views on how to get on with it? Have you automated and disengaged as your investment exposure grown perhaps?
Thanks
Monevator has been a great help to me ..knew zero back in 2014. Started to invest index funds globally. It’s worked great for me. I’m semi retired but could fully if I wanted to. I’m 60yr this year. 10 years ago I was more optimistic over Emerging Markets , not so much now it’s more the NASDAQ. I think you have to keep learning..reading. I sold my part owned /inherited rental as I found being a landlady too stressful as the rules, regulations. Responsibility was just not for me. I think you need to be a tradesman and tough as nails for that game..
Stuck every penny from sale in to index funds.
Timely article as I had exactly this conversation with a relative over New Years Eve drinks (perhaps not the best time or place to discuss investment strategy). My relative turned a £40K investment in houses into a million, by the neat trick of starting the journey back in 1992. As a result he thinks property is the best investment ever, owns 5(!) of them having just bought another, and despite my best efforts, isn’t considering selling up and chilling with Vanguard. I couldn’t find a way to persuade him otherwise, suggestions welcome on a postcard.
HNY to all and thanks again for this truly wonderful resource. I do like to spread the word. I work with a quite a young team and we have a pretty good salary sacrifice scheme, so ran a very high-level financial planning CPD workshop last year: ‘If I’d know at your age what we’re going to look at today, I’d be long retired now’. It was a great success and I’m running another in a couple of weeks on ‘Saving and Investment’. Hopefully the evangelising (with links!) has paid back into readership if not subscriptions! I may even have time for a final ‘Retirement Strategies’ session before I finally pull my own plug later this year.
New Year seems as good a time as any to sign up properly, as I’ve been meaning to for a while. I’m fairly new to the game and Monevator has been a great resource to stop me feeling completely ignorant about what I’m doing, but I should be ramping up my investments this year (with any luck) so will be digging into the articles to learn some more!
“There aren’t enough jobs for everyone”, says recent law graduate – BBC
There aren’t enough law jobs for everyone who wants one says Wealth of Nations.
It’s a reminder that all economics is either footnotes to Smith or wrong.
HNY, as someone who paid for a membership over the christmas period I can give some insight, the reason I signed up then was because my financial situation had changed. I’m perhaps a bit younger than many readers here being 26, although have been casually following for nearly a decade at this point. Until recently I was a poor student and graduate (and put your own lifejacket on before spending on frivilous blog subscriptions and all that), I’ve been fortunate to have a payrise recently and am now in a position to contribute to sites like this. This site has helped me immensely get my head straight financially and for that I’ll always be grateful and I hope to keep it around for others.
I have to say I had somewhat taken for granted the internet being alive and filled with interesting and informative sources, but with the rise of AI and enshittification, everything is starting to get lost so if a small subscription is what it takes to keep you (a high quality source worth my time reading) around you have my money.
Keep doing what you’re doing, I enjoy the weekend reading every week.
The Atlantic: “The 10,000-steps-a-day goal doesn’t originate from clinical science. Instead, it comes from a 1965 marketing campaign by a Japanese company that was selling pedometers.”
Do note that the five-a-day goal doesn’t originate from clinical science. Instead, it comes from a conference of California “produce” growers.
My guess is that that explains why nuts aren’t part of your five-a-day: the almond growers failed to turn up.
Happy new year everyone. Thank you for the link to the Morris Chang piece. I don’t generally subscribe to the ‘great man’ view of history, but it’s hard to think of many people who have changed the modern world as much as he has.
@WeeScott — Nothing to argue with in that list. And 9% plus time and sufficient savings will definitely get the job done!
@Dom — I have seen research on the impact of ESG investing cut both ways. A few years ago it was fashionable to argue you could do it with higher returns as the market was rewarding you for your companies being good, and the evidence seemed to point that way. Then 2022, the oil price jump etc, and it didn’t. I haven’t seen the latest figures. My suspicion is such returns were probably skewed for the past 5-15 years by the performance of tech tbh, and how allocated your chosen ESG strategy was to it.
Anyway here’s a read with more links to more reads for you from the excellent Joachim Klement:
https://klementoninvesting.substack.com/p/people-think-sustainable-investments
@GFF — I miss Working Lunch, I admit it!
@John Kingham — Really? That’s pretty shocking. I suppose the big numbers grab attention but it’s the antithesis of investing. He might as well teach them at the dog track.
@xxd09 — Well you can’t take it with you. Enjoy your new ride, seems like you have the balance right! 🙂
@CSTWFTT — I think cash is a very personal thing. For some people, having a sufficient wodge of cash is what enables them to stomach the volatility of shares, and without it they’d bail at a terrible time. For others, such as me for most of my investing life, it’s all opportunity cost — back then I’d rather pay the price of sleepless nights! 😉
This might be interesting:
https://monevator.com/asset-allocation-strategy-rules-of-thumb/
@Dawn — So far I’ve felt the same about being a landlord. Perhaps I’ll give it a go one day just to get it out of my system. But REITs seem an easier life, especially at today’s valuations. (For Moguls: https://monevator.com/better-than-buy-to-let-members/)
@Rich — It’s hard to argue with someone who has pursued a winning strategy at the best time in history to pursue it. To be fair, it’d be hard to get many US megacap tech investors to diversify at this point I suspect.
@2 more years — Good work, and thanks for spreading our links. All the best for your exit strategy.
@Precambrian — Thank you so much and I hope the 2,000+ articles in the archive get you up to speed rather than causing too many premature sleep sessions… 😉
@dearieme — I snorted at your Adam Smith reference so good one on that, but to be fair the legal system is pretty widely acknowledged to be understaffed, at least on the State side. So perhaps there are other non-market factors at play…
@JOHN L — Very interesting, and very generous of you to put us onto your hedonistic treadmill… 😉 I love the idea that there are switched-on young people reading this site — that’s where what we’ve written so much about can make all the difference over a long lifetime. Good luck, and I’m envious. 🙂
@ceratonia — True, but it’s also fascinating how much chance played a role in how things turned out. Let’s hope the ‘silicon shield’ holds, eh!?
Re #15 @TI link to the June 2012 Asset Allocation Rules of Thumb: interesting to see the debate in the original comments between @Paul Claireaux and the rest on the ‘bond bubble’. Paul was directionally right, but off a decade on the timing. How much would a 60/40 investor switching in 2012 to cash for the 40 side have been worse off come 2022? Would they be quids in overall now in Jan 25? Peter Lynch used to say more money was lost trying to avoid the crashes than in them. At the end of the day, we’re all flying blind and none of us knows when the fuel runs out or where the next landing strip is. Or as Chuck Prince, the ex Citi Group CEO, put it in the GFC, “as long as the music is playing, you’ve got to get up and dance”. A ‘bubble’, whether in bonds, shares or, for that matter, crypto, can go on for longer, and go up higher, than you may think is possible, or it may not, as the case turns out to be. Nothing is a given in this world.
I read that FT article, spat my dentures out! (I don’t have dentures, but am approaching that age)
The article seemed to me like the usual fundies whine, and as someone involved in corporate pensions (client side) this seems like lazy journalism. New year hangover, or page filler?
You will probably not be surprised that most [of ours] are in the default option and not contributing enough….when they get to 50 they may have a Damascene conversion, one hopes.
However, regarding the article the devil is in the detail, no need to expand on that too much but examine the opportunities, or lack thereof in the other G7 nations for investment and retirement savings in context of state support and clearly this is not a sensible contribution by the FT – riddled with inconsistencies.
I edited this a few times but perhaps our leaders should be thinking through to the future, how AI will affect jobs, incomes and savings….seems to me we’re looking at the twigs and not the forest.
@Delta Hedge (#17)
According to the data at the fidelity site, Royal London STMMF Acc has seen growth from 1.00 to 1.14 (i.e. 14%) between end of Dec 2012 and end of Dec 2024, while ishares ‘all stocks’ gilt fund Acc has seen growth from 1.38 to 1.40 (i.e., 1.4%). I note that, as might be expected, most of the growth in the MMF and most of the ‘loss’ in the all stocks fund occurred since the middle of 2022 (up to that point it would have taken a lot of conviction to hold the MMF fund with bonds being 40% up).
Of course, this simple returns approach ignores the rebalancing between stocks and fixed income in a 60/40 portfolio (perhaps portfoliocharts might answer that question).
@Prometheus (#18)
I’m looking forward(!) to seeing the full abrdn report to see how they’ve mangled the data. Certainly, the UK’s obsession with house prices and housing as opposed to productive assets has left house owners with a significant amount of their overall wealth in housing. It is not clear from the abrdn data whether ‘pension fund’ only includes DB pensions (which the UK still has plenty of) or whether it includes company DC schemes or SIPPS too. The category ‘equities and mutual funds’ is a bit wooly as well. Do the mutual funds include ETFs and Investment Trusts and does it include ones that hold bonds too?
While it doesn’t really change things too much, it is not clear whether the FT graph of stock market growth shows price or total return indices. The UK has higher dividends than the US, so total returns are a tiny bit better by comparison.
Why don’t people invest more? I’m convinced it sadly comes back to very poor financial literacy. If people understood all the ways basic economics undermined their financial lives they would realise they ‘must’ invest. I’m not actually old enough to remember the ‘better tell Sid’ campaign’s but this would be my one…
Take the inflation gremlin, measured by CPI. People often want to protect the value of their savings – which they measure against this inflation measure – a 4.5% deposit rate appears to achieve this. But how many people know the various ways CPI is distorted lower? I will give you just two but you should do an article on it!
1. the scarcest assets (e.g. housing) are excluded
2. substitution effects – CPI assumes when the prices of goods and services go up a lot, consumers switch to cheaper ones – so over time it’s not like for like
While CPI has risen by 3% p.a. over 30 years, the money supply has increased by 7%. Wages follow CPI, yet house prices and other truly scarce assets follow the money supply at 6-7%… and people are surprised that house prices have risen so much?
I posted a chart showing making this point clearly here: https://x.com/sequentanalyst/status/1875621553892925487
Investing is simply the ownership of truly scarce assets which pace the growth of money supply over time. Failing to hold truly scarce assets (stocks, real estate, fine art) means you are wilfully allowing yourself to be debased.
I’m continually shocked how few people understand this very basic principal of modern economics (including intellectual types in high paying jobs with the disposable income and ability to invest). The growth of the money supply well ahead of incomes is the core principle that enables economies to become ever more indebted. The absurdity grows larger because the majority of people actually VOTE for this, without setting their own financial affairs in order so as not to be the schmuck who loses because of it.
@AlanS #19: many thanks for doing the legwork with the Royal London STMMF Acc fund and iShares gilts fund.
Looks like the wholly unprecedented bond crash of 2022 meant that even being out by as much as a decade on a ‘sell all your bonds’ call (i.e. 2012 v 2022), as @Paul Claireaux was in 2012, still meant one would be better off than sticking with the classic 60/40.
After 2000-02, 2008-09 and 2022 it’s no wonder that so many in the UK have seemingly been permanently put off both shares and gilts, especially with the home bias of UK investors to the lackluster FTSE 100. Can’t say the Abrdn data surprised.
Perhaps with gilts in a 60/40 one should reconsider when the percentage earnings’ yield (inverse PE) on the 60 part of the mix in shares clearly goes over and stays above the 40 in gilts’ percentage yield to maturity (and maybe vice versa too?)
10 Years after taking the reins of my SIPP (and encountering the phenomenal Monevator!), the results are in. Drum roll… Close to 12% annualised return. As I say (often) after knocking up an improv dinner – ‘Not bad if I say so myself’ 🙂 Done with a dozen or so trades a year, gradually crystalised down to indexing the Nasdaq (mostly), with a dynamic allocation to a safe asset, cash and UK bonds. The safe asset being roughly set to ‘what allows one to sleep at night’. This may of course be the end of this bull run – but who knows, and if you have the horizon – does it matter? – Interesting times ahead for AI in particular.
Happy and New Year and thanks to all, whatever your investing creed. Here’s to the next leg of the journey!
Have I got this right.
All, a private company I worked for 20 + years ago and long forgotten has suddenly sold itself and shares I paid 700 quid for have suddenly became my best ever investment. In short after running the figures through the Gov capital gains calculator I owe them 10 K. Cant be bad. Now, what I’m thinking is can I take 10k and shove it on a aim penny share, if I lose the lot doesn’t matter, I don’t have to tell the government anything and I just carry on. But, if it comes right, I might make a few bob more and obviously pay my 10k original up plus pay tax on gains in my lucky penny share. Have I got this right, or do I just pay up and have done with it.
Cheers Happy New year.
@Griff – that does sound about right to me, nice idea – or have I also missed something? Obviously you’ve got to decide how long to wait before you crystallise anything.. You could throw in a bit of crypto into the bargain? Its all just a shot to nothing.
I guess there is a risk in there being a reversion in the value of the original asset while you wait for your high-risk losses to roll in?
@Griff — Congrats on your successful investment! You might find this article of further interest (but note it’s from 2012 so the specific rates may be out):
https://monevator.com/how-to-offset-capital-gains-with-losses-to-reduce-your-tax-bill/
@Delta Hedge — It’s even worse than that, you can go back to 2008 and you’d still be underwater:
https://monevator.com/managing-60-40-risk/
It’s worth noting the poster you cite — one of only 3-4 that I’ve eventually had to ask not to post on the site because of frequent clashes and IMHO needlessly disruptive posting, although I accept he’d have a different view — said much the same about index investing into equities around that time. (Can’t remember the years specifically, and lots of said comments were deleted though a few linger).
Obviously avoiding the equity market and sitting in cash since then would have cost an investor enormously too!
(Of course positions can change over the following years, so we shouldn’t hold anyone accountable for 15 year holding periods unless they specified that in their forecast 🙂 )
@TI: Can’t recall much now about @Paul Claireaux (having read MV since 2008, I wasn’t getting déjà vu about his 2012 comments reading them here in 2025), but I do remember the ‘epic’ to and fro over valuations with (and further to) @Rob Bennett from 2009-13 (who could forget 😉 ) e.g.:
https://monevator.com/7-ways-to-profit-from-other-peoples-folly/
And @#32&33 in:
https://monevator.com/passive-index-investing-feels-wrong/
At the time this got me thinking (hopefully more critically) about priors, with the result of now (trying) to assign only provisional, continually varying credences to ideas (e.g. valuation/mean reversion & fundamental analysis v technical analysis; and market efficiency v inefficiency/inelasticity/ behavioural finance/momentum & other ‘factors’).
Aside from mathematical near certs (like the Kelly criteria and leverage volatility drag), and some empirical seemingly high probability ideas (like single stock return skew as per Bessembinder), it’s a become a superposition of being simultaneously true, false and something in-between 🙂
@TI (#27) and @DH (#22)
Having looked at the last decade or so I was curious to see how often cash had beaten out bonds over historical rolling 10 year periods. So here are some results (for a purely fixed income portfolio with no withdrawals or contributions, return data sources from my paper at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4742450 for 1915 to end of 2023*).
The following table shows the percentage of 10 year rolling periods where bonds beat cash (3 month bills) for a selection of different bond funds.
All stocks: 73
0 to 5 yrs: 71
0 to 10 yrs: 78
0 to 15yrs: 77
15yrs+: 71
It is interesting to note that maturity makes a small difference (with under 10 years marginally winning out – bearing out the US results that, for passive portfolios, ‘intermediate’ bonds are a good compromise between returns and volatility), but that in general bonds outperformed 3-month bills. While I can’t add a graph here, there are two intervals when cash beat bonds. The first was for 10-year periods starting between 1945 and 1973, while the second was for the period starting in 2013. Both periods were characterised by either generally rising yields or, in the latter case, a fairly sudden increase in yields.
For those wanting to pursue an active approach in their fixed income, changing the duration to suit your forecast of future changes in yields is one possibility (and, for disclosure, the one area of active investing I pursue in a mild form since it stops me from more major tinkering).
* I’ve chosen 1915 because it was the first year where there were enough dated gilts in issue not to have to interpolate returns for intermediate maturity funds, while 2023 was chosen because I’ve yet to update the database for 2024!