Good reads from around the Web.
There’s a lot to enjoy in Morgan Housel’s useful reminder that buying the stock market in 2009 wasn’t “easy money”, but I especially liked his sample of all the claims in the subsequent years that the buying window had closed:
Barron’s, Nov. 2009: “The Easy Money’s Been Made”
Morningstar, Dec. 2010: “The Easy Money Has been Made”
MarketWatch, Nov. 2011: “The easy money has already been made”
TheStreet, May 2012: “The Easy Money Has Been Made”
Morningstar, Dec. 2013: “The Easy Money Has Been Made”
Barron’s, Oct. 2014: “The Easy Money Has Been Made”
CNBC, March 2015: “The easy Money has been made”
Do read the rest of Morgan’s article at the US Motley Fool website.
At this point my ego obligates me to mention that (by fluke!) I caught the bottom of the UK market to the day when I wrote in March 2009, :
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.
I could dine out on this, but even this extract gives us a clue that there was nothing easy or legendarily prescient about this call.
I am talking about “trickling” money into the market on the cusp of the buying opportunity of a lifetime!
What a muppet.
More importantly, I’d been buying throughout the bear market in the months that proceeded the low (having, again partially fortuitously, turned quite a bit to cash in 2007, motivated by the need for a deposit for a house I never bought).
I also remember – because I was both buying and blogging at the time – that everyone hated the stock market back then, including many who today write like they saw the imminent rally coming in 2009.
Don’t believe them. Most of them were fearful, and nearly all of them didn’t.
And incidentally “fearful” isn’t a criticism here.
The best of them – of us – were fearful.
You had to have the right mindset to be buying in 2009. You had to know that equities have suffered severe reversals many times before, and you had to believe that this one too would pass – that capitalism wasn’t headed for the scrapheap.
And then you had to be humble enough to hold on.
It wasn’t easy to cross your fingers and buy in 2009.
But arguably it’s been even harder to stay humble and remind yourself again and again that you really don’t know what will happen next as the good times have rolled on – especially as all investing involves asset allocation decisions and taking a view, if only about your risk tolerance.
Hardly. Lemon squeezy!
From the blogs
Making good use of the things that we find…
- Let me tell you a secret – Bason Asset Management
- Vanguard LifeStrategy: A one-stop solution – DIY Investor UK
- How much to invest in emerging markets? – Burton Malkiel
- Why Admiral is a top growth stock – UK Value Investor
- Stockpicking is the ethical way to invest – Richard Beddard
- The timeless nature of the herd mentality – Ben Carlson
- Netflix: If you burn it they will come – Investing Caffeine
- Is your CEO worth his millions? – Musings on Markets
- Just when you think you’ve figured it out – The Reformed Broker
Barmy* bonds mini-special
- Bonderland: The upside down world of fixed income – Value Perspective
- …also the latest GMO quarterly letter – GMO
* Time will tell…
- Progress, volatility, and the snowball – The Escape Artist
- Representation without taxation – Simple Living in Suffolk
- Emergency funds in retirement [Good comments too] – CotC
Product of the week: Low interest rates are fueling an appetite for mini-bonds. I have invested in three so far, but only with token amounts. As the Telegraph points out, it’s very hard for outsiders to value these securities. Everyone benefits from the wisdom of the crowd when buying publicly traded stocks and bonds, but here you’re betting on a flimsy prospectus. That said, while I agree with the Telegraph that the proper “retail bond” rugby offering paying 6.5% from Wasps seems much better than the new, unsecured Innis & Gunn beer bond paying 7.25% on account of the Wasp bond’s asset backing, I wonder what it’d really be worth in a truly distressed situation? The liquidity of retail bonds is to my mind their greater benefit, versus mini-bonds. If you do want to play in the mini-bond space, I’d think of it as exactly that – play, like going to Vegas – and aim to spread my bets widely over time.
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
- Value premium goes missing – ETF.com
- John Lee: The original patient capital trust [Search result] – FT
- Jim Slater: Buy Bovis not ASOS – Telegraph
Other stuff worth reading
- Better safe than sorry – the future is in cash [Search result] – FT
- A world of difference: Tackling inequality [Search result] – FT
- Once a banker – eFinancialCareers
- Why you must be the best at something in your career – Forbes
- Lessons from the (latest!) millionaire janitor – Washington Post
- The untold story of Silk Road: Part 1 – Wired
Book of the week: If you’re a disciple who can’t make it to Omaha for Warren Buffett’s jamboree this weekend then perhaps you could steal from his bookshelf? Only yesterday – and inspired by that list – I bought a non-investing friend a copy of Where Are the Customers’ Yachts? Timelessly funny stuff, which is just as well because it dates back to the aftermath of the Wall Street Crash.
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- Note some FT 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”. [↩]