Great post. Agree with every word. A little over 30 years ago I bought a copy of the Intelligent Investor (having seen it in a book shop a couple of years earlier) and pondered should I just buy some shares in Berkshire Hathaway…but then thought where’s the fun in that? Investing is just too interesting - if you are curious about the world.
I think another trick of Warren Buffett was to live in the middle of the country. It seems to me it kept him in touch with the tastes & ambitions of ordinary Americans. Like a Frank Capra movie, the question is what do ordinary Americans eat, how do they shop or buy insurance. Ultimately understanding the lifestyle of the average American gave him an advantage over professionals living in isolated gated communities. But that’s just a suggestion, being his own boss allowed him to focus on investing without the hassles of working in a large company.
Being away from all the noise definitely allowed him to think about the things that truly matter.
I think the evidence for index investing is pretty good, so if you’re buying stocks it’s probably because you love doing it. I just love the search, it’s so intellectually stimulating, I could do it all day every day - there’s no fun in buying the benchmark!
I’m glad you enjoyed the article, and thank you for commenting.
I’ve been pondering index funds, passive versus active investing etc. At what point do you throw in the towel and hand it all over to Fidelity or Vanguard or whoever… but I’m not so sure of late. I’ve just come across a few active fund managers who seem to have a spring in their step of late.
Is it just over here on this side of the Atlantic? Is it Trump back in the White House? Is it that so much money has flowed into the US stock market, hitting something like 65% of global market value at the start of the year, that this money wants to move elsewhere now? Some active fund managers based in London who have seen funds being withdrawn for several years seem confident that it will start moving back.
I feel similar. I can’t help but think it’s a smart thing to do, but I don’t feel comfortable doing it for some reason, maybe I never will - and will most likely watch it go up forever whilst being uncomfortable about it…
Yes the tide will eventually turn re the London managers - I also wonder how long they have been saying that? But the money will flow eventually, everything has its cycles.
Buying a fund right now gets me on edge - everything feels very delicate. Maybe that’s just how the world is now, delicate.
I think if a big crash came I’d likely pile into index funds, but buying them blindly monthly just feels wrong to me, whether that is to my detriment or not.
My solution to the dilemma over the past couple of months or so is to just go for value, and fund managers running income funds. Easier to do perhaps in the UK, Europe or Asia where investors seem to have an expectation of dividends and treat shares going up as a bonus.
High dividend yields are perhaps an indication of investors being more cautious in these markets, wanting jam today, or it might just be Europe is dominated by big companies in mature markets, but an income/value focus has just felt right since the start of the year.
One fund manager comes to mind, Artemis, who has a number of funds that seem to be actively managed and, as far as I can see, often compare favourably to their benchmarks.
The endless debate. Agree and Disagree. Buffett talks about another time in the 60s with no internet and 0.5 times PE stocks laying around. Now it's more difficult. Unless you concentrate in 4-5 names possibly. Even then, you can still buy 4 times earnings stocks that don't move for a long time. That's why you see few people doing 50% returns regularly as well.
Great post. Agree with every word. A little over 30 years ago I bought a copy of the Intelligent Investor (having seen it in a book shop a couple of years earlier) and pondered should I just buy some shares in Berkshire Hathaway…but then thought where’s the fun in that? Investing is just too interesting - if you are curious about the world.
I think another trick of Warren Buffett was to live in the middle of the country. It seems to me it kept him in touch with the tastes & ambitions of ordinary Americans. Like a Frank Capra movie, the question is what do ordinary Americans eat, how do they shop or buy insurance. Ultimately understanding the lifestyle of the average American gave him an advantage over professionals living in isolated gated communities. But that’s just a suggestion, being his own boss allowed him to focus on investing without the hassles of working in a large company.
Totally agree, Paul.
Being away from all the noise definitely allowed him to think about the things that truly matter.
I think the evidence for index investing is pretty good, so if you’re buying stocks it’s probably because you love doing it. I just love the search, it’s so intellectually stimulating, I could do it all day every day - there’s no fun in buying the benchmark!
I’m glad you enjoyed the article, and thank you for commenting.
I’ve been pondering index funds, passive versus active investing etc. At what point do you throw in the towel and hand it all over to Fidelity or Vanguard or whoever… but I’m not so sure of late. I’ve just come across a few active fund managers who seem to have a spring in their step of late.
Is it just over here on this side of the Atlantic? Is it Trump back in the White House? Is it that so much money has flowed into the US stock market, hitting something like 65% of global market value at the start of the year, that this money wants to move elsewhere now? Some active fund managers based in London who have seen funds being withdrawn for several years seem confident that it will start moving back.
I feel similar. I can’t help but think it’s a smart thing to do, but I don’t feel comfortable doing it for some reason, maybe I never will - and will most likely watch it go up forever whilst being uncomfortable about it…
Yes the tide will eventually turn re the London managers - I also wonder how long they have been saying that? But the money will flow eventually, everything has its cycles.
Buying a fund right now gets me on edge - everything feels very delicate. Maybe that’s just how the world is now, delicate.
I think if a big crash came I’d likely pile into index funds, but buying them blindly monthly just feels wrong to me, whether that is to my detriment or not.
My solution to the dilemma over the past couple of months or so is to just go for value, and fund managers running income funds. Easier to do perhaps in the UK, Europe or Asia where investors seem to have an expectation of dividends and treat shares going up as a bonus.
High dividend yields are perhaps an indication of investors being more cautious in these markets, wanting jam today, or it might just be Europe is dominated by big companies in mature markets, but an income/value focus has just felt right since the start of the year.
Nice - it’s a hard landscape to navigate. I think value is always a good place to be, I’d be interested to hear what kind of names you’re invested in.
One fund manager comes to mind, Artemis, who has a number of funds that seem to be actively managed and, as far as I can see, often compare favourably to their benchmarks.
Great read! And thanks so much for the acknowledgment.
Thanks mate! Keep up the great work.
Want to know about the mind set of Warren Buffet, then check out this article:
https://pakhrinresearch.substack.com/p/the-5-mental-models-that-made-warren?r=5plqgt
The endless debate. Agree and Disagree. Buffett talks about another time in the 60s with no internet and 0.5 times PE stocks laying around. Now it's more difficult. Unless you concentrate in 4-5 names possibly. Even then, you can still buy 4 times earnings stocks that don't move for a long time. That's why you see few people doing 50% returns regularly as well.
It’s definitely difficult, but also possible.
He has said that times are different now but the opportunities are still there if you’re willing to look hard enough.
Not as easy as it was in the 60’s though for sure.