Speculate on High-Risk Assets without Going Nuts
Top 5 of the Week of July 3
Jason Zweig, writing for his Safe Haven blog, kicks off our Top 5 this week by advising us on how to take crazy risks. Inefficient Markets blogger Vitaliy Katsenelson reveals the stocks investors are buying in today’s stock market. And Above the Market author, Bob Seawright writes about evidence-based investing and the types of advisors involved.
A Wealth of Common Sense’s Ben Carlson examines what the market does not care about. And Chris Reining interviews investing guru Morgan Housel for his self-named blog on how to build wealth…
Speculate on High-Risk Assets without Going Nuts
- There has been much advice given by distinguished investors on the nature of speculation in investing; specifically on the dangers involved with taking on high-risk assets
- But, there are ways to speculate that don’t involve making rash decisions and losing your mind
- Firstly, as Benjamin Graham suggests, set “aside a portion for this purpose” only—keeping it small—secondly, never mix your speculative assets with your mainstream investments, and finally, buy when it’s insane but not when it’s sexy
Do you speculate? Or do you prefer not to buy “wild assets”? Share your comments in the section below
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Current Buying Trends
- With the global economic environment as it is following Brexit in the UK, Japan and China struggling under masses of debt, and the earnings of the companies in the S&P 500 stagnating since 2013…
- Investors have been seeing stable but inferior returns, the average stock is expensive at the moment, and mutual funds are not faring much better
- All of which results in investors not buying the stocks they actually want to but merely what they dislike the least
The Stock Market Doesn’t Care About…
- The price you paid for a stock: You can anchor to that value all you want, but the market won’t wait to help you recoup your loss
- How complex your investing strategy is: Whether you make your investing process ridiculously simple or insanely difficult, it makes no odds either way
- What political or religious stance you take: You can be Republican, Democrat or Liberal, and you can lean towards any number of the ideologies available; the market still doesn’t care
Don’t Be That Guy
- When considering investment advice, receiving information and solutions that are supported by good evidence seems like a no brainer
- Yet, too few true practitioners in the investing world actually undertake evidence-based investing
- Motivation for advice can be based on fear, age and reputation, passion, novelty or nerves—so avoid these advisors like the plague
- Find an advisor who constantly rechecks and tests their work and assumptions, reinforcing their advice with life-long learning
Answers to Being a Successful Investor
- It’s important to appreciate what drives you and your financial goals as you journey through life; work out what makes you happy and how your finances can help you realize these ambitions
- The more experienced investors become, the more they tend to lean towards simpler investing strategies
- Focus on knowing yourself and your behavior; investment mistakes tend to happen because investors make decisions driven by emotions causing more pain to themselves than the market does
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.