In financial markets, predictions are ever-present and unavoidable. Yet investors worthy of the name don’t allow forecasts, including those of experts, to determine – or even influence – their decisions. The evidence has long been compelling but is almost universally ignored: authorities generally don’t (because they can’t) provide reliable guides to the future. Indeed, the … [Read more...] about Experts can’t predict yet investors must plan: What, then, to do?
Does high IQ make a better investor?
In a recent two-part series, I showed that successful investment isn’t a matter of raw brainpower; instead, it’s primarily the result of refined character – and particularly of Stoic disposition. This article elaborates two related points. First, high-IQ investors don’t outperform those of average intellect. Indeed, many people – regardless of their smarts – repeatedly make … [Read more...] about Does high IQ make a better investor?
Investing lessons from Benjamin Graham
Benjamin Grossbaum entered this life in 1894 as a Briton; Benjamin Graham left it in 1977 as an American. He inherited Judaism but chose Stoicism. In his autobiography (Benjamin Graham: The Memoirs of the Dean of Wall Street, McGraw-Hill, 1996), he recalled that he “embraced stoicism as a gospel sent to him from heaven.” The main components of his “internal equipment” included … [Read more...] about Investing lessons from Benjamin Graham
Successful investors are stoics – Part 1
What mindset underlies successful investment? How does an investor worthy of the name cope emotionally with sudden and sharp falls, as well as extended contractions, of individual stocks’ prices and market indexes’ levels? How does she prevent bull markets from inflating her ego and corroding her discipline? The answer to these questions is fundamental and (to many) … [Read more...] about Successful investors are stoics – Part 1
Two key amendments to Shane Oliver’s “9 keys to successful investing”
Shane Oliver’s recent article (9 keys to successful investing - and why they are more important than ever amid COVID, 15 October) summarises “nine key things for investors to bear in mind in order to be successful.” It contains plenty of common sense (which isn’t very common these days) and even some wisdom (which is rare). It’s also concise; indeed, it’d be hard to pack more … [Read more...] about Two key amendments to Shane Oliver’s “9 keys to successful investing”
The pioneering investor you’ve never heard of
Henrietta Howland (“Hetty”) Green (1834-1916) exemplifies the practice of investment that Benjamin Graham pioneered in the 1930s, Warren Buffett has advocated since the 1950s and Leithner & Company has practised since 1999. She bought quality assets that others shunned – particularly during the financial crises that punctuated her career – and during bull markets, when … [Read more...] about The pioneering investor you’ve never heard of
Why we need a “good” depression
Have you ever heard of the Depression of 1920-1921? In the U.S., where historical data are extensive, reliable and widely available, it was painfully sharp but mercifully short. According to the National Bureau of Economic Research, that country’s unofficial arbiter of the business cycle’s ups and downs, it commenced in January 1920 and ended in July 1921; it thereby partly … [Read more...] about Why we need a “good” depression
Central banks don’t dispense “Stimulus” – they peddle poison
Do Low Rates of Interest Really Support Markets? On 10 September, I concluded that they don’t. This article explores one of this result’s major implications: investors can’t depend upon central banks. This is because their “stimulus” has produced artificially-low rates that are increasingly – and dangerously – divorced from reality. It’s possible, as the saying goes, that … [Read more...] about Central banks don’t dispense “Stimulus” – they peddle poison
Do low rates of interest really support markets?
Do today’s minuscule rates of interest justify stock markets’ sky-high valuations? Bulls often imply – and sometimes boldly assert – that they do, and mainstream theory is on their side. The problem is that theory is elegant and tidy, whereas reality is clumsy and messy: many factors, many of them fleeting and some of which counteract others, are at play. In Australia and the … [Read more...] about Do low rates of interest really support markets?
Why This Market Is 33-50% Overvalued
Are Australian stocks overvalued, fairly valued or undervalued? Leithner & Company, a value investor based in Brisbane, regularly analyses data that shed light upon this vital – and perennial – question. This article outlines some of the argument and analysis that supports my conclusion that the All Ordinaries Index is presently overvalued by at least one-third and perhaps … [Read more...] about Why This Market Is 33-50% Overvalued