"36 Obvious Investment Truths"

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Lobster
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"36 Obvious Investment Truths"

Post by Lobster »

Always nice to have a quick reminder

36 Obvious Investment Truths
Submit to the relentless rules of humble arithmetic and avoid the tyranny of compounding costs.
Fallible
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Re: "36 Obvious Investment Truths".

Post by Fallible »

As Ben Carslson says of his 36 "simple and obvious" truths:
The obvious stuff is often the first casualty of the firehose of information, noise, opinions, predictions, and analysis out there these days
Thanks for the link. All investors, including Bogleheads, will always need to be reminded of the obvious.
"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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nisiprius
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Re: "36 Obvious Investment Truths"

Post by nisiprius »

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.
TheHouse7
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Re: "36 Obvious Investment Truths"

Post by TheHouse7 »

33. You are not Warren Buffett.

:oops:
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ResearchMed
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Re: "36 Obvious Investment Truths"

Post by ResearchMed »

My favorite:

"20. Proper diversification means always having to say you’re sorry about part of your portfolio.

RM
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Re: "36 Obvious Investment Truths"

Post by hushpuppy »

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"

Post by nisiprius »

TheHouse7 wrote: Wed Sep 06, 2017 1:29 pm 33. You are not Warren Buffett.

:oops:
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.
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Re: "36 Obvious Investment Truths"

Post by pkcrafter »

Thanks Lobster, excellent link. And thanks to Ben Carlson for another winner.

Paul
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VictoriaF
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Re: "36 Obvious Investment Truths"

Post by VictoriaF »

TheHouse7 wrote: Wed Sep 06, 2017 1:29 pm 33. You are not Warren Buffett.

:oops:
There is at least one example that falsifies this assertion.

Victoria
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VictoriaF
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Re: "36 Obvious Investment Truths"

Post by VictoriaF »

Ben Carlson wrote:9. No investor is right all the time.
Taylor is!

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)
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Re: "36 Obvious Investment Truths"

Post by pkcrafter »

VictoriaF wrote: Wed Sep 06, 2017 3:18 pm
Ben Carlson wrote:9. No investor is right all the time.
Taylor is!

Victoria
:thumbsup
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Re: "36 Obvious Investment Truths"

Post by staythecourse »

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
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.

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"

Post by staythecourse »

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.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle
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TD2626
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Re: "36 Obvious Investment Truths"

Post by TD2626 »

Most of these sorts of "obvious" things are just that - obvious. It's incredible how many people don't believe them, though.
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Re: "36 Obvious Investment Truths"

Post by oldzey »

Thanks for sharing, Lobster!

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.
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Re: "36 Obvious Investment Truths"

Post by james22 »

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.
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Re: "36 Obvious Investment Truths"

Post by Lauretta »

james22 wrote: Sun Sep 17, 2017 3:55 am 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
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...
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Watty
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Re: "36 Obvious Investment Truths"

Post by Watty »

7. Risk can change shape or form but it never really goes away.
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.

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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Re: "36 Obvious Investment Truths"

Post by BogleBoogie »

VictoriaF wrote: Wed Sep 06, 2017 3:15 pm
TheHouse7 wrote: Wed Sep 06, 2017 1:29 pm 33. You are not Warren Buffett.

:oops:
There is at least one example that falsifies this assertion.

Victoria
Haha nice! Thank you for that made me smile this morning. :sharebeer
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