"36 Obvious Investment Truths"
"36 Obvious Investment Truths"
Submit to the relentless rules of humble arithmetic and avoid the tyranny of compounding costs.
Re: "36 Obvious Investment Truths".
As Ben Carslson says of his 36 "simple and obvious" truths:
Thanks for the link. All investors, including Bogleheads, will always need to be reminded of the obvious.The obvious stuff is often the first casualty of the firehose of information, noise, opinions, predictions, and analysis out there these days
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
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Re: "36 Obvious Investment Truths"
Oh, that is really excellent. Three standouts:
24. Most backtests work better on a spreadsheet than in the real world because of competition, taxes, transaction costs and the fact that you can’t backtest your emotions.
27. It’s almost impossible to tell if you’re being disciplined or irrational by holding on when your investment strategy is underperforming.
35. The market doesn’t owe you high returns just because you need them.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Re: "36 Obvious Investment Truths"
33. You are not Warren Buffett.
"PSX will always go up 20%, why invest in anything else?!" -Father-in-law early retired.
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Re: "36 Obvious Investment Truths"
My favorite:
"20. Proper diversification means always having to say you’re sorry about part of your portfolio.
RM
"20. Proper diversification means always having to say you’re sorry about part of your portfolio.
RM
This signature is a placebo. You are in the control group.
Re: "36 Obvious Investment Truths"
delete
Last edited by hushpuppy on Fri Nov 17, 2017 9:44 am, edited 1 time in total.
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Re: "36 Obvious Investment Truths"
Corollaries: equally obvious though perhaps not as important:
Robert Hagstrom, author of The Warren Buffett Way: Investment Strategies of the World's Greatest Investor, is not Warren Buffett.
Frank Hunter, author of Warren Buffett: The Ultimate Guide to Accumulate Wealth And Invest Like Warren Buffett, is not Warren Buffett.
Mark Tier, author of The Winning Investment Habits of Warren Buffett & George Soros: Harness the Investment Genius of the World's Richest Investors, is not Warren Buffett. And he's not George Soros, either.
Just because a writer named Max Chen asserts that the iShares Transportation Average ETF, the Vanguard Consumer Staples ETF, and the Financial Select Sector SPDR ETF are "ETFs That Value Investors Buffett, Munger Would Approve Of," does not mean that these are ETFs that value investors Buffett and Munger approve of.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Re: "36 Obvious Investment Truths"
Thanks Lobster, excellent link. And thanks to Ben Carlson for another winner.
Paul
Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
Re: "36 Obvious Investment Truths"
There is at least one example that falsifies this assertion.
Victoria
Inventor of the Bogleheads Secret Handshake |
Winner of the 2015 Boglehead Contest. |
Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
Re: "36 Obvious Investment Truths"
Taylor is!Ben Carlson wrote:9. No investor is right all the time.
Victoria
Inventor of the Bogleheads Secret Handshake |
Winner of the 2015 Boglehead Contest. |
Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
Re: "36 Obvious Investment Truths"
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
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Re: "36 Obvious Investment Truths"
Similar to what Roger GIbson says in "Asset Allocation". Paraphrasing, being diversified means always being unhappy. Every year you will have something that is down.ResearchMed wrote: ↑Wed Sep 06, 2017 1:43 pm My favorite:
"20. Proper diversification means always having to say you’re sorry about part of your portfolio.
RM
Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” |
-Jack Bogle
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Re: "36 Obvious Investment Truths"
The best are his first several as a means to articulate what EVERY investor should know about the stats of investing. Risk and return at the same. They are just two sides of the same coin named volatility. If number is "+" it is return and when it is "-" it is loss. The same volatility that gives one high returns is the same that gives one high losses. Investing is about as simple as accepting that. Trying to get high return with less risk is what is a "free lunch" and gets A LOT of folks in a A LOT of trouble.
Good luck.
Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” |
-Jack Bogle
Re: "36 Obvious Investment Truths"
Most of these sorts of "obvious" things are just that - obvious. It's incredible how many people don't believe them, though.
Re: "36 Obvious Investment Truths"
Thanks for sharing, Lobster!
I like 16 and 17:
I like 16 and 17:
Ben Carlson wrote: 16. If you invest in index funds you cannot outperform the market.
17. If you invest in active funds there’s a high probability you will underperform index funds.
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman
Re: "36 Obvious Investment Truths"
2. If you want to earn higher returns you’re going to have to take more risk.
False - "The greater the potential for reward in the value portfolio, the less risk there is." Buffett
6. If you want to hedge against stock market risk the easiest thing to do is hold more cash.
True - but I'm not going to stop looking.
False - "The greater the potential for reward in the value portfolio, the less risk there is." Buffett
6. If you want to hedge against stock market risk the easiest thing to do is hold more cash.
True - but I'm not going to stop looking.
Re: "36 Obvious Investment Truths"
Interesting point! I raised it here viewtopic.php?f=10&t=224712
I think that Ben expresses the view of MPT, meauring risk by things such as volatility. My undestanding is that Buffett measures risk instead in terms of how a security is mispriced in comparison to its intrisic value (buying something worth 1 dollar for 50 cents is less risky and more rewarding than buying 1 dollar for 80 cents). Since academics believe that markets are efficient they would deny this view of risk.
Be as it may, I've read that many value managers complain that there are no bargains around at present...
When everyone is thinking the same, no one is thinking at all
Re: "36 Obvious Investment Truths"
I cringe with I hear someone say "I want a safe investment so I am buying bonds." Bonds have plenty of inflation and interest rate risk as well as default risk.7. Risk can change shape or form but it never really goes away.
I forget where I heard it but I remember the quote that goes something like, "In investing you can't avoid risk, you can only choose which types of risks you will take."
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