Classic Advice

By | 2017-07-17T12:21:53+00:00 July 28th, 2016|Uncategorized|

What makes a work of literature a classic? Photo: SV Klimkin. Source: Morguefile Mark Twain called a classic a book everyone wants to have read, and no one wants to read. We remember them from high-school: big, scary tomes with strange titles our teachers all said were full of wisdom. We really, really tried to get through them. Some of us actually did. But whether it was the 25th character named Ivan in a Tolstoy story, or a sentence in James Joyce’s Ulysses that [...]

Economic Growth and Investment Returns

By | 2017-07-17T12:21:53+00:00 July 27th, 2016|Global Market Update|

Growth and Investments Where do investment returns come from? Photo: Thomas Bresson. Source: Wikipedia For as long as I’ve been investing, people have said to put money into the stock market for growth and to own bonds for stability. That advice has gotten a little jumbled lately, but it still seems to hold true. The US stock market has returned 7.5% per year for the past 10 years, while the bond market has earned 5.25%. The same relationship holds for longer time periods Stocks [...]

Fashions, Fowls, and Trend-Following

By | 2017-07-17T12:21:53+00:00 July 26th, 2016|Global Market Update|

Where do investment fashions come from? Photo: G Pinant. Source: Morguefile I used to work near a large park, where I would take my lunch and eat outside. There wasn’t much litter in that park—any leftover food would quickly get devoured by the many pigeons that hung out there. They were always poking about, searching for random scraps that might have been left behind. If anyone began to feed them, a group would quickly assemble. First a few, then dozens of birds would fly [...]

On Tips and Tipping (Part 4)

By | 2017-07-17T12:21:53+00:00 July 25th, 2016|Global Market Update|

When do tips work? Photo: S Klimkin. Source: Morguefile Investment advice works best when people treat their investments like a business. If you are investing, you’re really acquiring future sources of cash. Some investments—like bonds—come with contractual payments and a final date. Others—like new companies—come with a vague promise to begin returning cash to shareholders when the business matures. All of them depend on how the economy does. If you were running a restaurant, you wouldn’t tune in to Duck Dynasty for advice. There [...]

On Tips and Tipping (Part 3)

By | 2017-07-17T12:21:53+00:00 July 22nd, 2016|Global Market Update|

On Tips and Tipping (Part 3) What’s wrong with investment tips? A “Rubbish Tip” in the UK. Photo: Bob Embleton. Source: Wikipedia Investment recommendations rarely work out. Part of the reason is because they need to fit into an overall plan. But people who give advice rarely give the nuance and conditions that might make the advice less applicable. Think of all the times you’ve seen the headline: “5 Stocks that could Double in the Next Year!” But what are the risk factors? How [...]

On Tips and Tipping (Part 2)

By | 2017-07-17T12:21:53+00:00 July 21st, 2016|Global Market Update|

On Tips and Tipping (Part 2) Everyone wants a tip. What’s the best way to make money? Photo: Nick Stanley. Source: Life of Pix Profitable investing starts with a plan. It starts with investors reviewing their goals, their fears, how much time they have, how much access to their money they need, and other circumstances. No one plans to fail, but many people fail to plan. And if you don’t know where you’re going, any road will do. But once you have a plan, [...]

On Tipping (Part 1)

By | 2017-07-17T12:21:53+00:00 July 20th, 2016|Global Market Update|

Psst: want a quick stock tip? Photo: Stuart J. Whitmore. Source: Morguefile Lots of folks ask me for a quick tip. It’s natural when they hear that I help people manage their money. After all, if you can find the next 10-bagger before it goes parabolic, you could spin the straw of your savings account into retirement gold. Or we think. But investing isn’t like that. It’s not about getting lucky. When we invest, we put our money to work among economic enterprises where [...]

Mr. Market and You

By | 2017-07-17T12:21:54+00:00 July 19th, 2016|Global Market Update|

Mr. Market and You Who is Mr. Market? Drama masks. Source: Musei Capitolini Investing is a partnership between the investor and Mr. Market. Mr. Market is a moody fellow. Some days he’s gloomy and unhappy. He wants you to buy something—anything—from him at the cheapest prices. The world looks uncertain, the economy looks lousy, profits are miserable, and nothing seems to be getting better. So the prices he asks for his goods are cheap. Other days he’s happier than a lamb skipping across the [...]

Getting Going

By | 2017-07-17T12:21:54+00:00 July 18th, 2016|Global Market Update|

How do you get started investing? Photo: Adam Raoof. Source: Animal Photos Investing can be daunting. Stocks, bonds, real estate, commodities—they all seem to hitting record highs. And there’s all the specialized jargon: cash settlement, maturities, dividends, not to mention taxes. Sometimes it seems like the industry deliberately makes things unclear so you’ll have to go to them for advice. And nothing comes for free, does it? We’ve all read stories of Ponzi schemes and other predatory financial products. It seems safer to leave [...]

Humpty-Dumpty Investing

By | 2017-07-17T12:21:54+00:00 July 15th, 2016|Global Market Update|

Investing has gotten really weird. Illustration from “Through the Looking Glass.” Source: Ebbemunk In today’s world the best performing assets are bonds. Bonds that have historically low interest rates continue to defy expectations. Ten years ago, bond guru Bill Gross famously declared that the great, multi-decade bond bull market was over. Since that prediction, long-term US Treasuries have returned 9% per year, while a cap-weighted index of global equities has returned about half that. And so far this year, bonds have zoomed up over [...]