Some good reading for the weekend.
While blogging has turned out to be much harder [1] 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 [2], 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 [3] 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 [4]!
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 [5].
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 [6] to consider the very positive outlook for shares in 2009 – which blog suggested they think more about where the market would be in 2020 [7] 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 [8].
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 [9] 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 [10] 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 [11] 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 [12]
Blogs about investing and such like
- My “Aha!” moment in investing – Rick Ferri [13]
- Get rich with good old-fashioned hard work – Mr Money Mustache [14]
- Millionaire Teacher [15]
: Schoolboy review – iii blog [16]
- Investors sit on the fence and watch new highs – Investing Caffeine [17]
- Choosing funds: Low costs or high performance? – Oblivious Investor [18]
- It’s a dividend spring – The Munro blog [19]
- Standard of living Vs Quality of life – Simple Living in Suffolk [20]
- $12 million underwear, and other strange finds on eBay – Len Penzo [21]
- How a mansion tax helps the rich – Stumbling and Mumbling [22]
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 [23]
Mainstream media money
- Repressionomics [a.k.a. why I own shares not gilts] – BBC [24]
- Central bankers are reading your Tweets – BBC [25]
- Small companies are not always beautiful – The Economist [26]
- Tactical asset allocation: Another rip-off – Swedroe/MoneyWatch [27]
- Retirement on your own terms – CNN Money [28]
- Savers
scared by financial firms intorushing to beat pension cap – FT [29] - The SVR mortgage domino effect has begun – FT [30] (Some options [31])
- Land of my rising pension fund – Merryn/FT [32]
- Beware of stupid dual-index structured products – FT [33]
- Save £1,500 a year with iPad apps… – Telegraph [34]
- …as Aviva also looks to an app to cut motoring costs – Telegraph [35]
- 4.05% cash ISA deal from Cheshire – Independent [36]
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