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All Assets Are an Investment in Some Hands and a Speculation in Others

Top 5 of the Week of January 9

Heading up our Top 5 this week is Ben Carlson of A Wealth of Common Sense who reflects on how investors judge performance as influenced by the 1973-74 bear market. Jason Zweig, a regular of the Wall Street Journal, asks us to be honest with ourselves—are we investors or speculators? And Collaborative Fund’s Morgan Housel looks at just how dynamic brutal honesty can be for investors.

Meb Faber, in his blog at Meb Faber Research, speculates on the difference in investing trends between the US stock market and the CAPE ratio. And this week, we begin with Part 1 of Early Retirement Now’s multiple part guide to safe withdrawal rates. Stay posted with us here at Become a Better Investor for more posts from these guys in upcoming weeks…

What Historical Data Can Teach Us


  • Investors evaluate historical data to optimize the strategies and assets of today, but without considering the ton of variables that would have influenced the markets then
  • Before the mid-1970s measuring stock performance was fairly limited, and before the 1990s it was difficult to expand your investing strategy outside of your country’s stock market
  • Human nature in investors will always remain the same, but markets will always forever expand and change

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All Assets Are an Investment in Some Hands and a Speculation in Others


  • Traditionally, it’s considered that an investor buys with long-term gains in mind while a speculator tries to exploit short-term price changes
  • Nowadays, it’s too complicated to draw that hard line down the middle—the same assets can have very different results according to the motivations and time horizon of the buyer
  • The buyer can, therefore, be both investor AND speculator, for future success though be sure you keep the two strategies segregated—have a different account for your speculations

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Enable a Smarter Culture of Honesty


  • Investors will have more faith in your funds and practice if you don’t attempt to hide any past errors in judgment but instead, stand up and admit to them
  • Credit news sources and researchers that update their resources and acknowledge any corrections they make
  • Above all, encourage a forum in your work where people can confidently reveal their mistakes to learn from failures and improve going forward

Brutal honesty or the occasional white lie with your investors? Start a discussion in the comments section below
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Go C-A-P-E


  • A global cross-section of the 25% cheapest country stock markets, has only beaten the S&P’s performance 60% historically
  • With foreign performance being behind so considerably, it has pushed the CAPE ratio of these country stocks down to a third of the value of the US market
  • Making the CAPE ratio strategy a great approach in 2016 and for the upcoming future

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A Study of 6.5 Million Withdrawal Rates


  • For those in the ‘Financially Independent, Retire Early’ (FIRE) community, finding optimal safe withdrawal rates for a 50/60 year retirement is paramount
  • Safe withdrawal rates determines how much you can withdraw each year once you’ve retired before you run out of money
  • Research advises on a slow transition when withdrawing income early to alleviate risk in the long run
  • It’s stocks long-term returns that make attractive withdrawal rates possible over the course of your longer retirement duration

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Top 5 of the Week is a summarized collection of financial investment articles that we like and think you might like too. Having written thousands of pages of equity strategy and company research between us, we understand the allure of the ever-changing world of finance. Investing is an art form—and like everything, something you can work on and improve at. There are some excellent writers out there on the finance web, some offer a running commentary on today’s market, some are doing research, some have tips on how to Become a Better Investor, and some just lift the cloud of fog behind a lot of financial jargon. Each week we will keep you up to date with the top 5 articles worthy of your attention.


Anything you would like to discuss about this week’s top 5? Do you have another favorite that isn’t mentioned here? Feel free to add it below. Let’s start a discussion in the comments section!

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DISCLAIMER: This content is for information purposes only. It is not intended to be investment advice. Readers should not consider statements made by the author(s) as formal recommendations and should consult their financial advisor before making any investment decisions. While the information provided is believed to be accurate, it may include errors or inaccuracies. The author(s) cannot be held liable for any actions taken as a result of reading this article. The Become a Better Investor Team doesn’t necessarily endorse any stocks or shares mentioned in the articles or the author of such articles linked to and summarized in Top 5 of the Week and cannot guarantee the accuracy of its information.