Novel Investor • Compounding investing wisdom...

Investing Comes With Baggage

June 24, 2015

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Jon

Every investment has the potential to offer you something – better returns, diversification, less volatility, more security – but most investors overlook the baggage that tags along.

I’m not talking about the stuff you carry on a plane. These are pre-existing problems you don’t find out about until much later in the relationship.

Simply, there’s always a tradeoff that must be weighed with every investment decision.

Most investors focus on the potentially good outcome while overlooking the bad possibilities and problems. The pros are why you invest. The cons, warts and all, that cause mistakes and bad behavior are often overlooked or ignored. Continue Reading…
Happy Hour: History Lesson

June 19, 2015

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Jon

I was reminded this week of the importance of history by one of the best financial writers today. Jason Zweig writes the Intelligent Investor column at the Wall Street Journal where he consistently weaves history lessons into common sense investing advice.

This week, he published two transcripts from speeches he gave back in 1999 and 2001. Both speeches show why there’s a need to learn history and how you should use it. Continue Reading…
Predicting Bond Returns For The Next Decade

June 17, 2015

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Jon

Two questions being asked right now about bonds is when will interest rates rise and how will it affect bond performance? Of course, these questions aren’t unique to today. Investors always ask about interest rates and the potential impact to bond returns.

There’s just one tiny problem. Nobody knows how far, how fast, or even when interest rates will move. Predicting the markets is fruitless in the short term.

That doesn’t mean you can’t come up with a realistic expectation for future bond returns. Continue Reading…
Happy Hour: Certainly Uncertain

June 12, 2015

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Jon

Howard Marks released a new memo (PDF) this week on risk. It’s a revised and updated version of a memo he wrote last year. Being that the topic is risk, it’s worth a read. I thought I’d highlight a piece of it.

One thing people are not good at managing, especially around investing, is risk. And that’s an understatement. People are generally terrible at it. Continue Reading…
10 Lessons Learned From Nick Murray

June 10, 2015

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Jon

I finally got around to reading Simple Wealth, Inevitable Wealth by Nick Murray after seeing it mentioned several times online. You might be able to find a used past edition on Amazon, but your best bet is to buy it new from Nick Murray’s site (the book deserves a much broader reach).

For non-finance folks, the book should be refreshing. Murray dispenses with the financial-ese and puts things into simple, common sense terms that anyone can understand and focuses on the timeless ideas that matter.

I dug through all my notes and picked out ten lessons from the book. Continue Reading…
Happy Hour: Graham on Stock Prices

June 5, 2015

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Jon

I re-read Ben Graham’s The Interpretation of Financial Statements this week. It’s a manual on, you guessed it – how to read financial statements. Okay, it’s not a thriller, but it’s barely 100 pages long and you can finish in an afternoon between naps.

At the end of the book, he briefly covers the difference between stock prices and values. This was 1937. Graham was well ahead of his time: Continue Reading…

Investing Comes With Baggage

Happy Hour: History Lesson

Predicting Bond Returns For The Next Decade

Happy Hour: Certainly Uncertain

10 Lessons Learned From Nick Murray

Happy Hour: Graham on Stock Prices