Good reads from around the Web.
I liked Mr Money Mustache’s take this week on the right way to think about falling share prices:
Suppose you’re just starting out as an egg farmer, and your goal is to build up a nice, profitable business.
You want to build up a flock of hens so big that they are eventually producing thousands of eggs per month.
Enough to live off for life and retire.
You buy your first 100 hens, and they get right to work.
You allow those eggs to hatch so more hens can be born, and you also continue to buy hens from the farm supply store.
Suddenly your phone rings and it’s Farmer Joe down the road.
“The price of hens has just dropped by 50%! You’ve just lost five grand on those hundred hens you bought last summer!”
Is this a sensible way to think about it?
No, of course not. You’re happy that hens are cheaper, because now you can build your egg business even faster.
Stocks are just like hens. They lay eggs called “dividends”, which are real money that can either flow automatically into your checking account, or automatically reinvest itself to buy still more stocks.
Read the rest of the article for his typically no-nonsense take on passive investing.
Sadly, the markets seem to have stopped falling and some have risen rather notably. The FTSE 100 is all but back to where it began the year.
Let’s hope someone comes up with a few new scare stories for the economy!
Gotta keep buying those egg-layers…
From the blogs
Making good use of the things that we find…
- When will the stock market get back to normal? – AARP
- Avoiding automobile and portfolio crashes – Investing Caffeine
- Smart Beta or dumb alpha? – CFA Institute
- My investing strategy plan – diy investor (UK)
- Will a 4% yield support the FTSE 100? – UK Value Investor
- A dozen things learned from economist Richard Thaler – 25iq
- Oil giants are looking interesting – The Value Perspective
- Intercontinental Hotels is in good shape – Richard Beddard
- Abundance is killing us – The Reformed Broker
- Home ownership is not the American dream – WCI
- 12 months from Financial Independence – Retirement Investing Today
- How to win an argument – The Escape Artist
- Why someone needs to start a new Vanguard – Steven G. Blum
- Fiddling with the portfolio while the retail investor burns – SLIS
Mainstream media money
Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber of that site.1
- Make a plan on how to handle risk, then stick to it – New York Times
- Vanguard has four new fixed income ETFs for UK investors… – ETF Strategy
- …and Lyxor is cutting fees on a number of bond ETFs – ETF Strategy
- Tickets for the Master Investor show on 23/4 in London are free – Website
- Doomsday for UK dividends – Telegraph
- Buffett’s Berkshire Hathaway looks good value – MarketWatch
- Smart Beta could kill off active managers – ThisIsMoney
- The lone analyst who had a Sell rating on Valeant – Bloomberg
- Lord Lee: Share triumphs and disappointments [Search result] – FT
A word from a broker
- Maximize pension contributions before the budget? – TD Direct
- Barclays: Shrinking to fit – Hargreaves Lansdown
Other stuff worth reading
- The most important number in Buffett’s letter – MarketWatch
- Swedroe: It’s time to buy the emerging markets – ETF.com
- RIP: The plain old cash ISA – ThisIsMoney
- Has Osborne ruled out big changes to pension tax relief? – Guardian & BBC
- How to increase the chances that your pension will outlive you – Telegraph
- Younger investors: Read this and thank your lucky stars – ThisIsMoney
- Don’t raise lots of money for your start-up – Fast Company
- The downside of “assortative mating” – New York Times
- Leap year mathematics – Slate
Book of the week: The UK Value Investor blog is a frequent denizen of the Weekend Reading roundups, so I was interested to see that the brains behind that site, John Kingham, has a new book coming out. I wish John the best of luck with The Defensive Value Investor. (And I wish The Accumulator would hurry up and finish our book!2)
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- 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”. [↩]
- Note: The Accumulator is doing his weekday job this weekend, poor dab. I’m only teasing, The Accumulator. [↩]