As I have written multiple times in prior posts, our gut instincts, friends’ views, media reports, and most expert opinions are really not that useful when it comes to investing. We, investors, consistently underperform even the ordinary index funds by as much as one-third due to … [Read more...] about Be mechanical about your investing approach
How I approach investing
Elon Musk, Tesla’s CEO, said last month that economic moats are lame: “If your only defense against invading armies is a moat, you will not last long. What matters is the pace of innovation. That is the fundamental determinant of competitiveness.” A few days later, I was in … [Read more...] about Are moats really lame?
If you were following business news in 2010, you must have come across one or two headlines bemoaning America’s “lost decade”. Between 2009 and 2012, there were many discussions in the business media and many columns were written in the press on this subject. How investors have … [Read more...] about Revisiting the lost decade of U.S. stocks
Some investors are fascinated with dividend paying stocks. They invest in them exclusively. Often times, these investors are looking to generate income. Some investors also believe that dividend paying stocks are safer to invest in. There are investment services and portfolio … [Read more...] about Rise above dividends!
Why do I say that? Because people often think of the stock market as a roller coaster. It goes up for a while, but then goes down, eventually ending up at the same place where it began, and then the cycle starts over. The implication is that one must catch the up-cycle to make … [Read more...] about Stock investing is not a zero-sum game
Why everyone and their grandmother don’t get rich investing in the stock market? It sounds straightforward enough to invest. All one has to do is buy an appropriate market index fund (or ETF) and hold it for ten or twenty years (the well-known buy-and-hold strategy). If you … [Read more...] about Don’t fall for steady returns
Warren Buffett’s shareholder letter came out last weekend. It’s an annual ritual and it makes for great weekend reading. I am a long-time shareholder and I appreciate how he comments on the general state of investing – besides his own company, Berkshire Hathaway’s affairs. As … [Read more...] about A lesson from Buffett
The best thing about long-term oriented stock investing is that it doesn’t require lot of work by us, the investors. Instead, we loan our money to people running actual businesses – and they work for us. We own shares in these public companies – so when they make money, we make … [Read more...] about Let smart people work for you!
Be wary of news briefs from the financial media – they are designed to catch reader’s attention but in reality often mean nothing – or worse could even be misleading. I follow mainstream news but with care. On one hand we investors need to stay abreast with news related to the … [Read more...] about How media get things wrong
… but only in the short run. As we saw in this previous post, stocks go down 10% or more every year. More often than not, they also recover quickly. So what return could we expect in a given year? Here is a good chart from J.P. Morgan. It shows the range of annual returns that … [Read more...] about Yes stocks are volatile