Good reads from around the Web.
Tons of links this week, so I’ll just kick things off with a Bloomberg piece about bear markets and robo-advisers.
The rise of these robots and their automated investment strategies has largely coincided with a multi-year bull run in stocks, which means the nascent industry could face a big test if markets were to turn.
A bear market would represent a challenge that the ranks of robo-advisers haven’t encountered yet, and it would be the ultimate test of just how crucial, or irrelevant, working with actual humans is to good, long-term investing.
It seems the tech-savvy Millennials who were first to adopt these passive and automated robo-strategies aren’t really paying much attention to the markets, compared to previous generations.
As Monevator regulars will know, such wilful ignorance will likely see them earning superior long-term returns.
The question is: Would a market crash that’s severe enough to cause ripples even inside their streamed flat white flooded artisanally crafted investing goldfish bowls (figuratively speaking) prompt them to dig out their robo-account passwords to meddle with their portfolios at exactly the wrong time?
We’re not in Kansas anymore
Pull back the curtain on all the grand mysteries of investing, and you’ll discover – nowadays especially – that simple can be most effective.
It’s easy to construct a passive portfolio. You can do it with a robot service or by investing in as few as two ETFs.
The difficult part is learning why most people should take a passive approach in the first place.
And then to have the knowledge to stick with it during the tough times.
A robot can do our paperwork.
But we still need a bit of self-education to give ourselves the investing heart, courage, and brains to see it through.
From the blogs
Making good use of the things that we find…
- Why people are angry that shares rallied – The Reformed Broker
- Are target funds right for you? [Canadian but relevant] – CCP
- Pay less, end up with more – The Evidence-Based Investor
- Want to retire at 90? – Investing Caffeine
- Next PLC looks good value – UK Value Investor
- Game theory and the oil market – The Aleph Blog
- Do more efficient markets justify lower returns? – A.W.O.C.S.
- What Hollywood – and investors – get wrong – The Value Perspective
- Pick stocks in an industry you know well [Research, PDF] – SSRN
- The freeze response in personal finance – The Escape Artist
- New graduates: Join a winning company – Josh Elman
- Should you sell your company stock? – Context
- The meaning of a 1,400-mile Tesla road trip – Mr Money Mustache
- A brief history on the value of time – The FIREstarter
- How to foster a start-up hub [Pittsburgh but relevant] – Paul Graham
Product of the week: Harlequins rugby club has launched a mini-bond that pays 5.5% over five years, reports The Guardian. I’ve now invested in a few mini-bonds, so I’ll not be too preachy – suffice to say that as an asset class they’re risky, illiquid, relatively opaque, and arguably too low-yielding given all of that. The Harlequins bond is unsecured, too, unlike a previous Wasps mini-bond that was theoretically backed by property. Oh, and Harlequins made an operating loss last year, says The Guardian. One for fans.
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
- Sell in May and go away – CFA Institute
- Woodford: Regulators too obsessed with liquidity – ThisIsMoney
- Buy UK shares ahead of the Brexit vote – Telegraph
- You’re probably not a contrarian – The Motley Fool (US)
- Jaded clients pull $15bn from hedge funds [Search result] – FT
A word from a broker
- Shell will become the UK’s top dividend payer in 2016 – TD Direct
- UK banks: What’s behind the weakness? – Hargreaves Lansdown
Other stuff worth reading
- Is the new Personal Savings Allowance lowering rates? – Telegraph
- Over £100bn of pensions cash ‘at risk’ in lifestyle funds [Search result] – FT
- House prices tripled in 15 years on London Marathon route – Guardian
- Why don’t Americans save more money? [US but relevant] – Atlantic
- The cost of financial isolation [Ditto: it’s a money special] – Atlantic
- Millennials who fit a year’s waste in a jam jar – The Guardian
- The science of making friends – The Wall Street Journal
- Busyness can be a sign of unhappiness – Quartz
Book of the week: Disrupted: My Misadventure in the Start-Up Bubble is an instant bestseller in the US. If you’ve ever worked at – or just passed through – a Silicon Valley start-up you’ll recognize the lunacy. If you haven’t, it might be safer to laugh at the inmates from a distance.
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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”. [↩]