The basics

How to fail at investing

There are an almost infinite number of ways to succeed at investing. If success is ending up with a portfolio large enough to meet your investing goals, whether that be early retirement, putting children through university, supporting family members, or leaving a legacy, there are countless ways to get there. You can, over time, create […]

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Have bonds ever failed?

We’re in a weird period for bonds right now. Interest rates are at all-time lows, bond yields are at all-time lows, and it’s looking more and more likely we may have to deal with a positive stock/bond correlation at some point soon. So should we still be investing in them? The purpose of bonds is

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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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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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International diversification: The evidence – Part 3

If you cast your mind back to this post (Against International Diversification), we saw some legitimate, evidence-based reasons which might support not diversifying internationally. Specifically, we saw that cross-country correlations are high, and that correlations are likely to converge to 1 during a crash. But are these arguments good enough to justify heavily overweighting our

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International diversification: The evidence – Part 2

In the previous post we saw that international diversification: Helps ensure one country’s drawdowns don’t affect your overall portfolio’s returns too much, Reduces risk through lower volatility, drawdowns, and vulnerability to Black Swans, Increases returns through minimising the volatility tax and owning the few countries which are driving returns. But that’s not all… Diversification reduces

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International diversification: The evidence – Part 1

We owe a lot to the ancient Greeks. They laid the groundwork for a huge swathe of today’s society, including democratic government, philosophy, theatre, architecture, mathematics, jury-based trials, medicine, and the Olympics. But there’s one aspect of Greek culture which hasn’t managed to endure the test of time – its stock market. The Greek stock

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How diversified is the FTSE 100?

I recently attended a small presentation given by the CIO of one of Oxbridge’s college endowments. He was a typical economist – articulate and confident in his views, with some big-brand names on his CV and a reassuringly expensive suit (he must know what he’s talking about). In typical economist style, he also threw out

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Cash cocaine

Holding cash can be incredibly addictive. It’s safe and understandable, whereas the markets are volatile and unknown. On paper we know that markets rise on average 3 out of every 4 years, and if left alone, investments can compound into serious wealth. But when you receive a cash lump sum and are considering whether or

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I’m worried about [insert major geopolitical event]. Should I wait before investing?

It’s always easy to find a reason not to invest. Because of the huge number of factors that can affect markets, combined with the never-ending cycle of major news stories, there’s always an event that could cause markets to fall. But despite this, the market’s risen in about 3 of every 4 years for as

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Is now a good time to invest?

By now you should be more comfortable with the reasons for investing, the importance of saving and investing, the amount you’d need to start investing, whether you’re ready to invest, what you can invest in, and how you can actually invest. But is now a good time to invest? To properly answer the question, I’ve

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Should I save or invest?

If someone asked you which was more important: the amount you invest each month, or the rate of return on your investments – what would you say? In my experience, most people tend to say their returns. And that’s understandable given how much time investors devote to eking out a few extra basis points of

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How do I invest?

Depending on how keen you are on getting stuck into portfolio construction, the difficulty of building your own portfolio can range anywhere from, “So easy, I literally don’t have to do anything” to, “This is impossible, I can’t believe I have to do all this myself – I don’t even know where to start”. The

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