Some good reading for the weekend.
While blogging has turned out to be much harder than I expected when I set up Monevator in 2007, I am proud of what I have achieved so far.
Woody Allen once said “90% of success is just showing up”, so to that end I’m proud to be still blogging five years on!
I’m very proud of my co-blogger’s passive investing articles, which I think can fairly claim to be the best single repository of such information on the Internet for UK investors.
I’m also very pleased that as the world slid into financial meltdown, Monevator was reminding readers to look to the horizon, to remember their long-term goals, that people have been scared many times before, and that such times have tended to precede the best returns.
I wouldn’t be human if I wasn’t slightly pleased that three years on from the bear market low, I can point to a post of 11 March 2009, where I wrote:
The global stock markets have suffered their worse declines for several generations.
Ultimately, if you’re not trickling money into the markets at these levels then I think you might as well forget stock market investing altogether.
To be perfectly honest, the timing was lucky: I am certainly not The Messiah!
But then again, you make your own luck, and to that end I am proud of the various articles I wrote around that time (before and after the low) on the value of investing in bear markets.
New readers may not appreciate how contrary that view was in 2008 and 2009.
Horror stories attract readers of blogs just as surely as they sell newspapers. And while Monevator had relatively little traffic in 2008 and 2009, I’d regularly get into ding-dongs on the comment sections of other gloomy blogs who claimed investing in shares was dead.
These ill-informed writers have probably cost their readers a lot of money.
The Internet is full of voices, and it’s ever harder to stand out. No wonder so many websites scream wolf, and urge passing traffic to take shelter from a falling sky.
I only hope readers remember which blog was urging them to consider the very positive outlook for shares in 2009 – which blog suggested they think more about where the market would be in 2020 rather than in 2012.
To be clear, I did not claim shares would bounce back as hard and fast as they have done. I just knew for a stone-cold fact that the FTSE 100 at less than 4,000 was a far better buy than when it was approaching 7,000.
Falling share prices are your friend, especially if you’re buying long-term income.
Three years on, two posts of the week
Fun as it is to sing your own praises once in a while, two other websites have done a far better job than I think I could in celebrating the three-year birthday of the post-2009 bull market.
Every passive investor should read Canadian Couch Potato for a magnificently different take on the past three years:
“You were in a terrible car accident: you were hit by a bus,” the doctor says gently. “You’ve been in a coma.”
“How long?”
The doctor glances nervously at her colleagues. “A long time, I’m afraid.” She pauses again. “Three years.”
It takes a few seconds for this to sink in. Three years? Your mind is filled with just one urgent question. “I gotta know, Doc. Give it to me straight. How have the markets been doing?”
Genius stuff, and it just gets better from there.
As this excellent recap from The Motley Fool‘s Morgan Housel points out, rumours of the death of long-term investing back in 2009 were much exaggerated:
With the crash of 2008, and ensuing rebound, came a widespread belief — presented as almost axiomatic — that the practice of buy-and-hold investing was dead. More volatility allegedly meant investors could no longer just buy companies and wait indefinitely; you had to be able to get in and out to score good returns.
“When will Wall Street and the financial media admit it? Probably never,” Sy Harding wrote in Forbes. “But buy-and-hold as a strategy is dead and gone, if ever it was a viable strategy.”
But buy-and-hold only looks dead if you start investing when stocks are expensive. Yes, if you purchased stocks in 2000, when the S&P traded at 40 times earnings, you suffered a lost decade. That’s how investing works. […]
Buy-and-hold still works if you buy good companies at good prices. That has always been true; it’s just easy to forget during boom years. The higher valuations are when you begin investing, the lower your returns will be afterward. Nothing about the past few years has changed that.
If anything, the explosion of volatility has been a blessing for smart buy-and-hold investors, providing some of the best buying opportunities of the past century.
All of us – whether stock pickers, passive investors, or something in-between like me – need to realise that the past three years have been truly remarkable. In fact, we’re unlikely to see a similar three-year run again in our lifetime.
I loved investing in 2009 and 2010. Things will only get harder from here.
p.s. Monevator reader John Hulton has written a short eBook for Kindle. While his Slow & Steady Steps from Debt to Wealth
Blogs about investing and such like
- My “Aha!” moment in investing – Rick Ferri
- Get rich with good old-fashioned hard work – Mr Money Mustache
- Millionaire Teacher
: Schoolboy review – iii blog
- Investors sit on the fence and watch new highs – Investing Caffeine
- Choosing funds: Low costs or high performance? – Oblivious Investor
- It’s a dividend spring – The Munro blog
- Standard of living Vs Quality of life – Simple Living in Suffolk
- $12 million underwear, and other strange finds on eBay – Len Penzo
- How a mansion tax helps the rich – Stumbling and Mumbling
Book of the week: One of my favourite investment writers, Morgan Housel of the US website Fool.com, has just published a Kindle book: 50 Years in the Making: The Great Recession and Its Aftermath
Mainstream media money
- Repressionomics [a.k.a. why I own shares not gilts] – BBC
- Central bankers are reading your Tweets – BBC
- Small companies are not always beautiful – The Economist
- Tactical asset allocation: Another rip-off – Swedroe/MoneyWatch
- Retirement on your own terms – CNN Money
- Savers
scared by financial firms intorushing to beat pension cap – FT - The SVR mortgage domino effect has begun – FT (Some options)
- Land of my rising pension fund – Merryn/FT
- Beware of stupid dual-index structured products – FT
- Save £1,500 a year with iPad apps… – Telegraph
- …as Aviva also looks to an app to cut motoring costs – Telegraph
- 4.05% cash ISA deal from Cheshire – Independent
Like these reads? Subscribe to read them every weekend.
Comments on this entry are closed.
Congrats on your 5th birthday – I have only recently stumbled on your blog but really enjoy reading it so keep going!
So many of the pf blogs seem to be US based that a UK site of such clarity is wonderful to find. I used to like the Motley Fool site but it has become too much flogging of investments and away from its passive investing roots.
I love moneysavingexpert too but their aim is saving money not investing.
Good luck with future development and stories.
I remember that March 2009 post…. wasn’t writing these little letters back then so I can’t prove it…!
I echo Sarah’s well wishes…
@OldPro — Thanks. (I didn’t enable commenting until some time in 2010 for most posts, so you wouldn’t have been able to comment).
@Sarah — Thanks very much! This isn’t quite the site’s fifth-year anniversary — the anniversary is it’s 3 years since the stock market low of 2009. But I’ll take congrats any day, and your generous words too. Glad to have you reading.
I’ll gladly third Sarah’s endorsement – this remains my favourite UK finance blog, not only because it is a terrific mine of advice for novice investors (where else can one get a decent layman’s introduction to sub shares or reits, for example?), but also for the reason that TI is in the same boat as the rest of us – investing sensibly for a more secure future. There’s nothing quite like this in the British blogosphere so thank you for all the efforts you give.
Not sure though it feels to me like a three year bull run – more like a nine month bull run to 5500 and then two or more years of crab like movement, with a couple of dips and humps! I wish I had more to invest in 2009 (don’t we all), but in some ways the discipline required since early 2010 has probably offered a better learning experience.
Congrats on the (near) birthday.
I invested a fair bit in 2008/2009, took a breather in 2010, and then got stuck in again late last year.
I wish prices would go down again as it’s not easy to find bargains at the moment.
Congratulations of your five years, and many thanks for the link. I’ve always enjoyed reading about passive investing from a UK perspective, especially with your trademark sense of humour. 🙂 Keep up the great work!
Oh, and sorry I misunderstood about the five-year anniversary. 🙁
I echo all the above, i restarted once my fixed term ISA’s started to unwind from 6.5% and was only offered 1.5-2.0%. so i fed money in progressivly over the past 2 years and have been more than happy.
I suppose the big questions are, as it peaked, will it start to fall or just jog along 5800-6000?
What i have done is looked to shares with a good, steady dividend history and am holding, poor dividend payers i am weeding out.
Thats it for now, look forward to the next 5 years.
Thank you for this blog. I’ve shared it with family and friends and we get something out of it. Keep going! Tom
I add my thanks and congrats to everyone else’s – Monevator has become one of my Saturday rituals.
Congratulations! I started reading your blog last year and you have provided interesting and informative opinions on investing in a very enjoyable manner. Thanks and keep up the good work!
Happy Birthday! It has been an absolute pleasure reading everyone one of your blogs posts…Shame you had to recap on a time when the market was so so low. I was a poor student….i could hardly invest anything!!!
I started pushing money into the stock market at the end of 2008 and, although I did not discover your blog until some time later, it was good to find such detailed confirmation of my own rather nebulous reasoning.
I wonder if you might do an overview post sometime soon of where we are now and what investors should be doing? My own feeling is “not much”, but I suppose that depends on how much you have invested to some extent.
First of all, I endorse all the above comments and hope you continue for many years to come. My financial education has been enhanced considerably due to your ability to communicate in a clear and unpretentious manner.
Secondly, many thanks for the mention of my new ebook ‘Small & Steady Steps…’
John H
Thanks for all the generous comments, everyone. 🙂
@Faustus — Very pleased to see you’re still about. 🙂
@GadgetMind — That’s the spirit. Bring on the falls!
@Canadian Couch Potato — Great post, and great to have you stop by!
@Lupulco — Nobody knows the answer to that. Personally, if/as the FTSE moves above 6,000 I’ll look to start rebalancing my portfolio a bit more from my very long equity exposure. I’ve already bought more Lloyds Preference Shares recently, for instance (risky, but a different kind of risk at least…)
@tommyg @Tyro @Steven @MCF — Thanks all.
@Salis Grano — Yes, even if I were qualified I wouldn’t presume to be able to say what all posters *should* be doing. 🙂 I do have a plan to take stock with a post if/when the FTSE touches moves past some significant goalpost. It’s a terribly tricky time for diversification, I feel.
@John — Thanks very much!
Congratulations, and thanks for the steady voice in favor of passive investing. While I wasn’t yet blogging in March 2009, I did double up on my U.S. 401K retirement plan contribution that month. I fully agree that if you can’t buy when prices are down, investing is not for you. Thanks again!