Investing

Beware graphs bearing outperformance

“Timeo Danaos et dona ferentes” – Beware the Greeks bearing gifts  – Virgil, Aeneid (II, 49) The more articles I begin with a Latin aphorism, the more I can feel myself slowly starting to recoup my expensive ancient history degree – one shoehorned semi-relevant Virgil quote at a time. I’ll try not to overdo it. …

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Why do we buy expensive investments?

Having just opened a Native American jewellery store in Arizona, the owner was having trouble selling some of her turquoise pieces. Despite the jewellery being high quality, and it being the peak of the tourist season, they just wouldn’t sell. She’d priced the jewellery reasonably. She’d tried placing them in a central display location. She’d …

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Is investing a zero-sum game?

If you win at blackjack in a casino, you take someone else’s money. If you lose, someone else takes your money. There’s no wealth being created or destroyed, it’s just the same cash being redistributed between the players. That’s a zero-sum game – more for me means less for you. Other examples of zero-sum games …

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How much money is in the world?

Figuring out how much money is in the world is an interesting question. Not one which has any real practical value, but it’s an interesting one. And what’s the point of having a blog if you can’t answer interesting questions?   Contents   How much money is held in: Cash Cryptocurrencies The stock market Debt …

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Why do stocks go up?

It sounds like a pretty basic question, doesn’t it? We all know that, in the long run, markets rise over time. But answering why stocks go up is surprisingly difficult. Contents Stocks go up because companies make money Why will companies generate more cash in the future? If most companies die, why do markets keep …

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Is investing gambling?

About a dozen or so friends from school and I have a WhatsApp groupchat which has now been running for over 10 years. It started as a way for us all to keep in contact as we started university, and has carried on ever since. I was trawling through the hundreds of unread messages on …

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My 5 favourite books of 2020

Although I managed to avoid catching coronavirus in 2020, I did catch another virus, of sorts. Its symptoms included: Increasing levels of claustrophobia as my house was slowly invaded with bookcases Payments to ‘AMAZON UK’ metastasising throughout my spending history A virtuous feeling, shared only by vegans, which manifested itself in having the uncontrollable urge …

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The best Vanguard passive index tracker funds for UK investors

If you’re an investor based in the UK, you’ve probably heard of Vanguard. They’re a hugely popular fund manager, and offer a slew of attractively priced, predominantly passive, funds for investors to choose from on their platform. But with so much choice comes some tricky decisions. Which fund, or funds, should you choose? Which is …

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Are large stocks getting larger?

This is the sixth part in a series examining the evidence behind the claim that passive investing is causing a bubble. For the previous part, on whether passive investing is making the market more concentrated, click here. — Looking at the behaviour of the largest stocks in the world can offer us some interesting insights …

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Passive investing and market crashes

This is the fourth part in a series examining the evidence behind the claim that passive investing is causing a bubble. For the previous part, on whether passive investing is setting prices, click here. — Let’s assume for a moment that there is a relationship between indexing and market crashes. Indexing, for whatever reasons, increases …

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The market share of passive investing

This is the second part in a series examining the evidence behind the claim that passive investing is causing a bubble. For the first part, on Sharpe’ Arithmetic of Active Management, click here. — For any investment strategy to distort the market, it must be big. Very big. And, despite all the clamour around the …

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Is passive investing causing a bubble?

Is passive investing really worse than Marxism? Is it creating a ‘frightening risk for markets’? Or are the concerns around passive investing nothing more than trumped-up fearmongering? This series begins by examining one of the most fear-inducing (and therefore one of the most persuasive) claims thrown at passive investing – that the rise of passive …

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The best investing blogs

Following on from my last article on ‘The best investing books for beginners’, which proved to be a popular post, I’ve compiled a list of my favourite investing blogs below. Eventually my intention is to collate all my favourite resources (books, blogs, and podcasts) into one place, so this post makes a start at collecting …

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Smooth is what we aim for

Let’s say I offer you a simple gamble. You take £100 of your own money, then toss a coin. If it’s heads, you win 40%, if it’s tails you lose 30%. Would you accept the gamble? Simple maths says you should – the expected return is +5% (50% * 1.4 + 50% * 0.7). But …

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Why nobody likes diversification

I work as an investment manager, and a few years ago I had a boss called James (not his real name). His job was mainly portfolio construction, but he occasionally took client meetings and provided portfolio updates to some high net-worth individuals alongside the relationship managers. He had a vast repertoire of favourite sayings that …

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