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Weekend reading: Common Sense for crazy times

What caught my eye this week.

I enjoyed Ben Carlson’s response to the GameStop ferment this week.

He could have dived into the minutia of gamma squeezes and Reddit lore. But instead the Wealth of Common Sense [1] blogger and Weekend Reading favourite dived into his archives.

Ben decided to reprint a chapter of his book Everything You Need To Know About Saving For Retirement [2]. In it he explains how he helped his then-girlfriend (miraculously now his wife) to get familiar with market volatility with data like this:

It’s a golden oldie, and foundational to long-term investing.

As Ben writes [3]:

Many people compare the stock market to a casino but in a casino the odds are stacked against you. The longer you play in a casino, the greater the odds you’ll walk away a loser because the house wins based on pure probability.

It’s just the opposite in the stock market. The longer your time horizon, historically, the better your odds are at seeing positive outcomes.

There’s something grounding about returning to old writing and classic wisdom when confronted with a new tumult, don’t you think?

They’re more like guidelines

Of course religions have been doing this sort of thing forever. Anyone who grew up within earshot of a holy book-quoting relative can attest to that.

And indeed it’s too complacent to get religious about investing.

The US stock market doesn’t have a preordained right to 10% returns a year over the long-term – let alone to spank the pants off other markets around the world for years. Equities in general aren’t totally guaranteed to deliver higher returns than bonds, say, even if you hold them for a generation or two.

But there’s many good reasons to think they should. Implicitly, whether we invest passively or actively, we put our faith in that, and other investing ‘truths’.

The point is to – just like a church go-er trying to weigh up contradicting passages and the strong suspicion they’ve sinned – achieve a balance.

Trust in shares for the long-term, but have some bonds and/or cash.

Don’t watch your portfolio every day if you’re a passive investor. But tune in once or twice a year to rebalance and check everything is on-track.

And so on.


Forgive me father

Okay, so Ben is not a saint. He did also deliver his own hot take on the GameStop squeeze. Several hot takes in fact, including in his podcast [4].

Ah well, we’re all only human.

I wonder which version his wife got this time if she happened to ask about GameStop?

I also wonder where to find these eligible people who’ll marry someone who explains the stock market to them on a date. They elude me!

Have a great weekend.

From Monevator

Fighting the Financial Independence demons – Monevator [5]

Regulators must leave investors the chance to be spectacularly wrong – Monevator [6]

From the archive-ator: Bring me sunshine [From February 2020, when markets took their first Covid hit]Monevator [7]


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 [8]

House prices falling as stamp duty boom loses momentum, says Halifax – Guardian [9]

Energy bills to rise for about 15m UK households as Ofgem lifts price cap – Guardian [10]

Jeff Bezos is stepping down as Amazon’s CEO – BBC [11]

Predictions for what could be in the 3 March Budget – Which? [12]

(Click to enlarge the good news)

Israel’s vaccine programme gives hope to the world – The Economist [13]

Products and services

RateSetter is returning all cash to investors and becoming a lender – RateSetter [14]

‘Buy now, pay later’ firms such as Klarna to face FCA regulation – Guardian [15]

What negative interest rates would mean for your pension, savings, and debt – Yahoo Finance [16]

Sign-up to Freetrade via my link and we can both get a free share worth between £3 and £200 – Freetrade [17]

A guide to the best UK restaurant meal kits – Guardian [18]

New platform Raindrop claims to set self-employed up with a pension in ten minutes – ThisIsMoney [19]

Homes on the top floor, in pictures – Guardian [20]

Comment and opinion

The GameStop drama was misleading. The surer path to wealth is extremely boring – New York Times [21]

The best way to manage sequence of returns risk – A Wealth of Common Sense [22]

Baroness Altmann: UK investors need better protection from the FCA – TEBI [23]

Friends don’t leave friends holding the bag – Abnormal Returns [24]

You can’t control the outcome, only the process – The Escape Artist [25]

Americans are gambling in the stock market, and much else – Slate [26]

Larry Fink: “…in coming years, pension funds are only going to be investing in sustainable, customised indexes” [Couple of weeks old]CityWire USA [27] [h/t Abnormal Returns [28]]

GameStop: Short stories

GameStop saga overhauls the hedge fund business – SL Advisors [29]

This furor has inflicted lasting pain on the long/short model – Bloomberg [29]

Benn Eifert on how retail trading is rocking markets [Podcast]OddLots [30]

Wall Street thanks you for your revolution – The Reformed Broker [31]

The price-value feedback loop – Musings on Markets [32]

The GameStop affair is an example of ‘platform populism’ – Guardian [33]

Naughty corner: Active antics

A rare interview with star stock picker Nick Train [Video]ThisIsMoney [34]

Silver surge could signal coming commodities boom [Search result]FT [35]

Disruptive Innovation with Ark’s Cathie Wood… [Podcast] – via Apple [36]

…and a disruptive model portfolio for 2021 – Telescope Investing [37]

What do short-sellers really do? – Noahpinion [38]

Vlad Tenev: it’s time for real-time trade settlement – Robinhood [39]

People buy riskier stocks when trading on a smartphone [Research]SSRN [40]

Covid and politics

Virus cases show clear signs of fall in most of UK – BBC [41]

One Pfizer jab gives better-than-predicted 90% protection after 21 days, but risk of infection doubles in the first eight days after vaccination [Presumably because the vaccinated become less cautious]Guardian [42]

Israel says vaccine has almost halved Covid cases in over-60s – Reuters [43]

How AstraZeneca’s vaccine was hit by flawed trials, defects and politics, but might still save the world [Search result]FT [44]

Brexit: The economic cost of absurdity – Advisor Perspectives [45]

Kindle book bargains

Need a Kindle? Buy [46] a Kindle and save a ton of living space, too.

Quit Like A Millionaire by Kristy Shen and Bryce Leung – £0.99 on Kindle [47]

Elon Musk: How the Billionaire CEO is Shaping our Future by Ashlee Vance- £0.99 on Kindle [48]

The Six Conversations of a Brilliant Manager by Alan J. Sears – £0.99 on Kindle [49]

The Smartest Guys in the Room: The Scandalous Fall of Enron by Elkind and McLean – £0.99 on Kindle [50]

Off our beat

Off-road, off-grid: the modern nomads wandering America’s back country – Guardian [51]

Insults and expletives turn parish council Zoom meeting into internet sensation – Guardian [52]

The relentless Jeff Bezos – Stratechery [53]

Want to get out alive? Follow the ants – Nautilus [54]

The terrifying warning inside the Earth’s ancient rock record – The Atlantic [55]

Americans don’t know what urban collapse really looks like – The Atlantic [56]

Seed-sized chameleon may be world’s smallest reptile – Guardian [57]

And finally…

“Always remember that short-term is two to three years, and long-term is 20-plus years.”
– Tim Hale, Smarter Investing [58]

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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”. [ [64]]