Top 5 of the Week of January 14th
In our Top 5 this week, Stefan Cheplick, writer of his own blog, reveals his learned wisdom from the stock market last year. Vishal Khandelwal from Safal Niveshak shares his yearly investing ideas. And Factor Research’s Nicolas Rabener runs us through the Factor Olympics of 2018.
Charles Rotblut of AAII uncovers his growing list of investing resolutions for 2019. And Nick, author of the Demonetized Blog, gives us another perspective on Wunderwaffen or superweapons…
2018 Investing Lessons Learned
- Don’t discuss your portfolio “when it’s up” it stops being a means of financial independence and becomes a status symbol instead
- Don’t make out that any gains are the result of anything other than luck or accident, it’s not a good look on you
- 2018 may have been a ‘cash rules’ year, but the one before it was not—remember which one is not normal
- Think in decades and years rather than hours and minutes
- Read one investing book a month and systemize the way you make decisions about buying stocks
Successful Investing Ideas
- Always expect randomness—looking for patterns, while a natural human trait, doesn’t help us in investing
- Avoid the “hot hand effect” by checking out at least ten years of business activity when considering a new stock
- Trust your reasonable doubts enough to avoid a stock when you’re unsure
- There’s a great argument for life being improved by subtracting things, not adding in more—the same is true for investing and portfolios
A 2018 Factor Analysis
- Most factors remained flat until the final quarter of last year, which corresponds with the decline of global equity markets
- After that began though, Momentum and Size were both in the negative, while only Low Volatility and Quality generated positive returns
- Value was only consistent in its decline throughout the year
How did factors affect your 2018 investment performance? Share your comments in the section below
2019 Investing Resolutions
- Automate as many of your basic transactions to become as disciplined as possible about your finances when routine decisions will become harder
- Become a responsible investor by being aware of the environmental, social and governance (ESG) impacts your investments have on the world
- Be careful about your online identity and protect it as much as possible, this should now include freezing your credit files
- Concentrate on your process, rather than your goals
The Problem with Wunderwaffen
- Looking for superweapons (wunderwaffen) involves a lot of wasted time—because while the idea of them is thrilling, they can prove futile and even hazardous
- Don’t underestimate your culpability for seeking out the “sophistication” of superweapons
- As in the military, wunderwaffens won’t help us win the war—or with our investments—in fact, they’re far more likely to “blow up on us”
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.
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