Investing by Ear

By |2018-09-26T06:11:58+00:00September 26th, 2018|Global Market Update|

Remember music lessons? Photo: Musikrat. Source: Pixabay I played the French Horn growing up. I started playing in the 4th grade, taking lessons from our band-director and an instructor, Mr. Klinger, who used to come to our home. My parents put up with the blats and brays and never complained – at least to me – although I’m pretty sure they knew musical entertainment was never going a reason for me to give up my day job. So why did they do it? Why [...]

The Wisdom of Diversification

By |2018-09-18T06:00:15+00:00September 18th, 2018|Global Market Update|

Diversification works. Public Domain. Source: Wikimedia That’s the secret to the success of many major consumer products. Coca-Cola was created when someone accidentally added carbonation to medicinal syrup. Play-Doh was supposed to be a wallpaper cleaner. Toothpaste started as a homemade powder made from salt and burnt bread, but then someone noticed Parisian artists squeezing their pigments out of lead tubes, and so they put the toothpaste into the tube. In his famous commencement address at Stanford, Steve Jobs tells how the idea for [...]

Upside-Down Investing

By |2018-04-03T07:24:06+00:00April 3rd, 2018|Global Market Update|

Invert. Always invert. Public Domain. Source: US Army Inversion is a solid analytical technique. Some problems are best solved by thinking backwards. The Stoics used this approach 2000 years ago. They called it “premeditatio malorum” – imagining what could go wrong. That way, they considered, you won’t be shocked and appalled when life sends you unpleasant surprises. We’re taught to do this behind the wheel. My instructor called it defensive driving, imagining what unpredictable moves other drivers might make. The NPR call-in show “Car [...]

Growing on the Beach

By |2018-03-05T07:15:46+00:00March 5th, 2018|Global Market Update|

Have you ever noticed how beach grass grows? Photo: Jon Sullivan. Source: Public Domain Photos Ocean beaches often have dunes behind them, covered with beach grass – sometimes surrounded by protective fences. The plants grow in lines, strengthened by creeping underground stems that connect them to one another. Over time, the grass thickens and the sand dunes stabilize. This helps prevent coastal erosion. In Europe, peasants used beach grass for fuel, thatch, and animal fodder, until they realized that using the up the grass [...]

Staying Comfortable

By |2018-02-22T07:36:36+00:00February 22nd, 2018|Global Market Update|

How do you stay calm when the market is crazy?     Drawing of Valkyries. Illustration: Johannes Gehrts. Source: Wikimedia Birgit Nilsson was a great dramatic soprano. One day an interviewer asked what was the key to successfully performing in demanding roles like Brunhilde and Isolde. Her answer was immediate and a little surprising: comfortable shoes. Some of the operas required Nilsson to stand in place – on her feet, singing – for hours at a time. If her feet started to hurt, it [...]

The (Greater) Wealth of Nations

By |2017-08-17T07:06:58+00:00August 17th, 2017|Global Market Update|

How can nations get richer? Source: US Mint Ever since Adam Smith and David Ricardo, the path to national wealth was assumed to be specialization. Scotland should spin wool, and Portugal should make wine, Smith argued. Then they should trade, and everyone will be better off. It’s possible to grow wine grapes in Scotland, but the cost of doing so – in labor and materials – would make a Scottish winery far less productive than one in Portugal. Ricardo expanded this notion to relative [...]

Class Consciousness

By |2017-08-01T10:00:53+00:00August 1st, 2017|Global Market Update|

What is an asset class? Photo: Alvimann. Source: Morguefile We all know that it pays to be diversified – to spread your investments around. But you need to spread them among different types of investments. Someone who owns 50 tech stocks can hardly claim to have a diversified portfolio. The most basic investment unit is the asset class. But what is this? An asset class should be a stable group of economic investments that looks similar to each other, but that behaves differently from [...]

Public Issues, Private Issues

By |2017-07-17T16:44:41+00:00July 13th, 2017|Global Market Update|

What is private equity? Source: Wikipedia Private equity is an equity position in a company that isn’t publicly traded – that hasn’t been listed on a public stock exchange. For ordinary investors, there are two ways to invest in private equity. You can invest in a private equity fund, or you can give money to a friend or family member in exchange for a share of their business venture. Limited partners of Bain Capital’s Asia XI Fund are private equity investors, as are your [...]

Homeward Bound

By |2017-07-17T12:21:23+00:00April 6th, 2017|Global Market Update|

Is now a good time to start international investing? Photo: Victor Hancek. Source: Picjumbo Most investors have a home-bias in their portfolio. That is, they own a higher percentage of domestic stocks than a globally diversified portfolio would indicate. This is true for folks who tout indexing as well as for active managers who pick stocks. US-based investors prefer US stocks; UK investors prefer shares listed in London; Japan-based investors prefer Japanese stocks, and so on. There are several reasons behind this. Familiarity bias [...]

Timeless Investing Truths

By |2017-07-17T12:21:28+00:00February 17th, 2017|Global Market Update|

Why is investing so rewarding? Photo: Victor Hanacek. Source: Picjumbo Investing is fascinating. It’s not just the financial returns, significant as those may be. But investing is valuable in its own right. The profession is intellectually demanding, the competition is consistently stimulating, and the relationships with clients and colleagues are priceless. Here are some timeless truths about investing that have impressed me over the three decades I’ve been investing and the ten years I’ve been writing about it. First, be humble. You don’t know [...]