A popular argument against the "buy and hold" strategy is to point out the S&P 500 index in March 2013 ended up at the same level it was 13 years earlier.
However
1. Index returns exclude reinvested dividends.
2. The argument ignores profits when you dollar-cost-average.
Stick to a good process.
However
1. Index returns exclude reinvested dividends.
2. The argument ignores profits when you dollar-cost-average.
Stick to a good process.
05:38 AM - Dec 05, 2023
We should all be feeling a little more happier about our portfolios.
The S&P 500 index and the Dow Jones are a stone's throw away from reclaiming all time highs.
The tech-laden NASDAQ & small-cap focused Russell 2000 have some way to go.
Our recovery has been fragile, but momentum is back on track.
The S&P 500 index and the Dow Jones are a stone's throw away from reclaiming all time highs.
The tech-laden NASDAQ & small-cap focused Russell 2000 have some way to go.
Our recovery has been fragile, but momentum is back on track.
07:00 PM - Dec 02, 2023
Market timing is something people do successfully in hindsight.
Your record is perfect when you trade historical charts, but in the heat of the moment things are never that obvious.
No one really knows if a dip is temporary or something more serious.
It's easier to stay invested & keep investing.
Your record is perfect when you trade historical charts, but in the heat of the moment things are never that obvious.
No one really knows if a dip is temporary or something more serious.
It's easier to stay invested & keep investing.
07:11 AM - Nov 30, 2023
I was very sad to hear about the passing of investor legend Charlie Munger.
He was instrumental in shaping my investment philosophy. My achievement of financial freedom is owed in large part to Charlie's insights and teachings.
Charlie Munger is a worthy inductee to the Mount Rushmore of Investing.
He was instrumental in shaping my investment philosophy. My achievement of financial freedom is owed in large part to Charlie's insights and teachings.
Charlie Munger is a worthy inductee to the Mount Rushmore of Investing.
04:40 PM - Nov 28, 2023
Your circle of competence is the realm of knowledge & expertise accumulated over your life.
Knowing the boundaries of that circle is the key to success.
On matters outside your circle, act on the best, most trustworthy information.
Resolve to be a lifelong learner & expand your circle of competence
Knowing the boundaries of that circle is the key to success.
On matters outside your circle, act on the best, most trustworthy information.
Resolve to be a lifelong learner & expand your circle of competence
04:30 PM - Nov 27, 2023
This chart shows the reality of being a long-term investor in stock of a high-growth business.
Even a quality business will take you on a rollercoaster ride.
The stock price free-falls when the market is gripped with fear, and rockets above any justifiable valuation when the market is exuberant.
Even a quality business will take you on a rollercoaster ride.
The stock price free-falls when the market is gripped with fear, and rockets above any justifiable valuation when the market is exuberant.
07:18 PM - Nov 24, 2023
Learning to control what we can control while letting go of what we can't is an essential trait of successful stock market investors.
Carl Richards provides this succinct wisdom on a napkin.
We need to master what we can control. Over the long-term, the rest will take care of itself.
Carl Richards provides this succinct wisdom on a napkin.
We need to master what we can control. Over the long-term, the rest will take care of itself.
06:11 PM - Nov 20, 2023
This chart shows the dispersion of average annual returns narrows as we increase our holding period.
This is an important point for long-term investors - the longer we hold, the more likely we capture the expected returns of the market.
We just have to endure the volatility during the tough times.
This is an important point for long-term investors - the longer we hold, the more likely we capture the expected returns of the market.
We just have to endure the volatility during the tough times.
06:17 PM - Nov 17, 2023
Like in every discipline, you never really arrive when it comes to investing.
The landscape evolves, things change, knowledge progresses.
You must embrace the journey & enjoy the process of life-long learning.
If you allow your level of knowledge remain static, the world will leave you behind.
The landscape evolves, things change, knowledge progresses.
You must embrace the journey & enjoy the process of life-long learning.
If you allow your level of knowledge remain static, the world will leave you behind.
04:54 AM - Nov 15, 2023
The S&P 500 index consists of 500 of the largest industry-leading companies in the United States, representing 80% of the total US stock market.
The larger the company, the greater the weighting it commands in the index.
Most investors use this index to benchmark stock market returns.
The larger the company, the greater the weighting it commands in the index.
Most investors use this index to benchmark stock market returns.
05:50 PM - Nov 13, 2023
This is a reminder that prediction is difficult in matters of business & investing.
If outcome you're predicting is determined by 100s of variables in a landscape that's constantly changing, it's best practice to avoid overconfidence.
Although confidence sells & persuades, resolve to stay humble.
If outcome you're predicting is determined by 100s of variables in a landscape that's constantly changing, it's best practice to avoid overconfidence.
Although confidence sells & persuades, resolve to stay humble.
03:56 AM - Nov 12, 2023
The Dow Jones Industrial Average (DJIA) is the grand-daddy of all major indexes. The DJIA contains 30 industry-leading stocks. It's widely quoted and has a long lineage.
However, it's deeply flawed because it's a price-weighted index. Stocks with the highest prices get the highest weighting.
However, it's deeply flawed because it's a price-weighted index. Stocks with the highest prices get the highest weighting.
06:07 PM - Nov 10, 2023
On a long-term chart, market crashes just look like small dips.
But every squiggle hides a real story of euphoria and fear.
Few remember the -19.7% correction between Sep to Dec 2018 because it's so routine & it happens so often.
Maintaining your composure is essential when you invest in stocks.
But every squiggle hides a real story of euphoria and fear.
Few remember the -19.7% correction between Sep to Dec 2018 because it's so routine & it happens so often.
Maintaining your composure is essential when you invest in stocks.
05:17 PM - Nov 09, 2023
Just like in life, investing is all about trade offs.
If you want to beat the performance of a broad market index, you have to put in the time and effort.
If you want to be the best, you need total dedication and massive effort.
It's OK to sit back, relax and accept market index returns.
If you want to beat the performance of a broad market index, you have to put in the time and effort.
If you want to be the best, you need total dedication and massive effort.
It's OK to sit back, relax and accept market index returns.
05:28 PM - Nov 07, 2023
Why is trading so difficult?
The following table shows why.
The sheer number of repeatable decisions a trader has to get "right" makes for a difficult journey.
The more decisions you face, the more opportunities you have to get it wrong.
Probably best to master a simple long-term strategy first.
The following table shows why.
The sheer number of repeatable decisions a trader has to get "right" makes for a difficult journey.
The more decisions you face, the more opportunities you have to get it wrong.
Probably best to master a simple long-term strategy first.
06:18 AM - Nov 06, 2023
Unfortunately, trader survival rates are extremely poor.
Trading stocks is a low probability path to wealth.
It’s certainly not impossible to get wealthy trading stocks but the odds weigh heavily against you.
Long-term investing puts the probability of success firmly on your side.
Trading stocks is a low probability path to wealth.
It’s certainly not impossible to get wealthy trading stocks but the odds weigh heavily against you.
Long-term investing puts the probability of success firmly on your side.
07:08 PM - Nov 03, 2023
The stock market is an "electronic marketplace of stocks" where chaotic pools of buyers and sellers haggle over price.
This noise generates price fluctuations that are totally unrelated to the intrinsic value of the underlying business.
Long-term investors ignore the noise & focus on the business.
This noise generates price fluctuations that are totally unrelated to the intrinsic value of the underlying business.
Long-term investors ignore the noise & focus on the business.
06:45 AM - Nov 02, 2023
When you invest in the stock market, you're effectively hopping onboard the train of a roller coaster.
You need to strap in, hold tight and accede to the wild ride.
You have no control over the turns, dips & inversions. You can only control your reactions to the ride, so you may as well enjoy it !
You need to strap in, hold tight and accede to the wild ride.
You have no control over the turns, dips & inversions. You can only control your reactions to the ride, so you may as well enjoy it !
04:50 PM - Oct 30, 2023
Short-term traders focus on price movement, treating stocks as an instrument to be traded
Long-term investors focus on the performance of the underlying business. They see stocks as a means to acquire fractional ownership
For most investors, "look through" framing gives you the best odds of success
Long-term investors focus on the performance of the underlying business. They see stocks as a means to acquire fractional ownership
For most investors, "look through" framing gives you the best odds of success
07:57 PM - Oct 27, 2023
If you're engaged with the stock market and regularly track its progress, always keep in mind that "Mr Market" will go hunting for your pain points.
The recovery of the S&P 500 index back to all time highs may have stalled for now, but it's only temporary.
You'll be rewarded for staying the course.
The recovery of the S&P 500 index back to all time highs may have stalled for now, but it's only temporary.
You'll be rewarded for staying the course.
06:15 PM - Oct 26, 2023
The asymmetry principle of investing is exploiting opportunities where potential return is multiples of how much you risk
But asymmetry is not just an investment principle, it's a LIFE principle
Focus your life on the asymmetric opportunities where the benefit/return is multiples of the effort/cost
But asymmetry is not just an investment principle, it's a LIFE principle
Focus your life on the asymmetric opportunities where the benefit/return is multiples of the effort/cost
05:38 PM - Oct 23, 2023
The foundation of investing is to exploit the asymmetric relationship between risk and return when it works in your favour.
Don't risk $1 to make 10 cents ... risk $1 to make $3, $4, $5 or $10.
This can be achieved by investing for the long-term. You have to give your investments time to grow.
Don't risk $1 to make 10 cents ... risk $1 to make $3, $4, $5 or $10.
This can be achieved by investing for the long-term. You have to give your investments time to grow.
06:24 PM - Oct 22, 2023
Here's a sample of headlines declaring the death of "buy and hold" investing 13 years ago.
There'll come a time when the headlines predict the death of "buy and hold" investing again.
It worked many decades ago & will continue to work provided you own a diversified stock portfolio.
There'll come a time when the headlines predict the death of "buy and hold" investing again.
It worked many decades ago & will continue to work provided you own a diversified stock portfolio.
07:46 AM - Oct 20, 2023
I use this hack all the time when I'm unsure about a Yes/No decision or choosing between Option A/B.
I'm always surprised how often I don't need to flip the coin when pressed.
I still carry a wallet - one coin, multiple cards & ID.
For those with only phones and digital wallets? Dunno.
I'm always surprised how often I don't need to flip the coin when pressed.
I still carry a wallet - one coin, multiple cards & ID.
For those with only phones and digital wallets? Dunno.
07:18 AM - Oct 20, 2023
Risk is an intriguing subject, especially to investors.
Alex Honnold, the free solo climber featured in documentary "Free Solo" describes the risk he faces:
"it’s LOW risk, but HIGH consequence" (loss of life)
He prepares for very climb with meticulous precision.
Risk is about odds and consequence.
Alex Honnold, the free solo climber featured in documentary "Free Solo" describes the risk he faces:
"it’s LOW risk, but HIGH consequence" (loss of life)
He prepares for very climb with meticulous precision.
Risk is about odds and consequence.
05:43 PM - Oct 18, 2023
The behavioural aspect of investing is much more difficult to master than the theory.
We like to think our behaviour is driven by rationality and prudence, when in reality we’re primarily driven by emotion.
That’s why so many investors herd in periods of exuberance and panic in periods of turmoil.
We like to think our behaviour is driven by rationality and prudence, when in reality we’re primarily driven by emotion.
That’s why so many investors herd in periods of exuberance and panic in periods of turmoil.
06:17 PM - Oct 15, 2023
James Clear provides an excellent definition of wealth in its various forms.
Investors have to remember that financial wealth isn't the be all and end all.
We all possess social and mental wealth and we should take advantage of that.
Aspire to lead a balanced life.
Investors have to remember that financial wealth isn't the be all and end all.
We all possess social and mental wealth and we should take advantage of that.
Aspire to lead a balanced life.
05:12 AM - Oct 14, 2023
The journey to investment mastery is a marathon.
Theory & teachings solidify with experience.
You need the theory & the guiding principles because without it, there’d be nothing to solidify.
If you focus on building a solid grounding in the fundamentals, the advanced concepts come easy.
Theory & teachings solidify with experience.
You need the theory & the guiding principles because without it, there’d be nothing to solidify.
If you focus on building a solid grounding in the fundamentals, the advanced concepts come easy.
03:29 AM - Oct 12, 2023
The power of compounding takes a long time before the flywheel gets going.
The inconvenient truth is your savings & how much you invest will be the biggest determinant of how much your portfolio grows in the 1st decade.
Investment returns won’t matter as much as the amount of cash you’re investing.
The inconvenient truth is your savings & how much you invest will be the biggest determinant of how much your portfolio grows in the 1st decade.
Investment returns won’t matter as much as the amount of cash you’re investing.
06:03 AM - Oct 10, 2023
Whenever you learn a new skill like investing, there's always a 4 stage hierarchy.
Always start at the bottom - you don't know what you don't know.
Defer to the wisdom of the experts in their field.
People get in trouble when they think they know more than they do. Overconfidence has a high price.
Always start at the bottom - you don't know what you don't know.
Defer to the wisdom of the experts in their field.
People get in trouble when they think they know more than they do. Overconfidence has a high price.
04:43 PM - Oct 07, 2023
