Some weeks ago I published an article looking at the worst month in the stock market: September. Today, 29th of September, as September is coming to an end, and we’re about to enter the best season being invested in stocks: October to the end of April. Let’s look at two portfolios: One invested from the…
In Street Name Your capital is at risk when you are investing in equity markets, but I assume very few consider the broker as a potential risk. But the fact is that your capital might be at risk if the broker goes bankrupt. Not only your cash deposit but also your shareholdings. How is this…
Introduction and summary: I have invested in Estateguru since 2016 and this review shares my thoughts and experiences as a lender and investor on their marketplace. I have a very small investment on this platform. Estateguru was established in 2014 in Estonia and provides bridge loans, business loans and development loans for borrowers. Normally, there…
Yesterday, the 3rd of September 2020, witnessed a pretty big drop in the stock market with Nasdaq leading the decline with a drop of 5.07%. Out of interest, I looked at the performance of September going back to 1970, using S&P 500 (not including dividends). The chart below shows the performance from the close of…
Are whisky casks a good investment? Is it worth buying a cask of whisky? Alcohol has for thousands of years been a vital part of human culture (whether you like it or not). Whisky though, a result of distillation, was discovered by monks as late as 1100-1300. In this article, we look at whisky as…
Tail risk is a form of portfolio risk that arises when the possibility that an investment will move more than three standard deviations from the mean is greater than what is shown by a normal distribution. Tail risks include events that have a small probability of occurring, and occur at both ends of a normal…
Ray Dalio’s All-Weather Portfolio was constructed to stand the test of time, no matter the investing climate – be it inflation, deflation, or stagflation. How did the portfolio perform during Covid-19, a period that witnessed enormous volatility? Ray Dalio’s All-Weather Portfolio performed very well during Covid-19. While the stock market dropped 30%, the All-Weather Portfolio…
Some months ago I wrote an article about the historical performance of so-called “sin stocks”. Tobacco companies have performed the best in the US, and alcohol stocks in the UK. In this article, I briefly argue for the reasons why and why they most likely continue to outperform. Tobacco stocks outperform the market because they…
2010-2020 produced better returns than the historical averages: From the start of 2010 until today, 27th of July 2020, S&P 500 returned 250% (dividends reinvested), which is a CAGR of 13.3% annually. Pretty impressive! Is it realistic to expect the same or at least close to 13%? Typical after a decade of strong returns, optimists…
The last decade has produced fantastic returns in most global asset classes (commodities excluded), helped by enormous interventions by central banks. Can we expect similar high returns in the coming decade? More importantly, what is the best asset class when the interest rates are close to zero? ZIRP – what is it? ZIRP is the…
Most people invest in real estate, perhaps quite logically since this is a very easy business model to understand. Equity (stocks) is perceived as riskier and thus less desirable as an investment. The aim of this article is to give some pros and cons with both asset classes (I’m considering direct investments – not mutual…
Harry Markowitz won the Nobel Prize in 1990 for his work in showing mathematically how you can both reduce risk and create better returns by diversifying across regions and assets. Risk is of course measured in volatility, ie. how your assets fluctuate in price. Such a theory was new when it was first released in…
In this article, we look at how much you can pay for a quality company and still make high and acceptable returns. Perhaps surprisingly, you can pay quite much if you manage to find quality stocks. I use examples and practical calculations to prove my points. Introduction and summary: In an article a few weeks…
No matter how good strategies you have, they are most likely worthless if you can’t execute them properly. What looks like a piece of cake on paper, is completely different in the real world when you are risking your own hard-earned money. Will the strategy continue to perform after a drawdown? Is it just a…
Summary and introduction: Research shows that the majority of investors underperform the broad market indices. The most likely reason is due to frequent buying/selling and behavioral mistakes. When you are trying to “outsmart” the markets, you most likely end up losing to the market. To successfully invest you actually need to do as little as…
“Compound interest is the eight wonder of the world. He who understands it, earns it….he who doesn’t, pays it” -Albert Einstein Presumably, Albert Einstein said the words above, and likewise, Benjamin Franklin said that time is money. Unfortunately, we seem to forget these very simple principles when it comes to most decision making – be…
Numerous studies suggest women are better investors than men, which of course might hurt the egos of many men. Why are women better investors than men? It’s because women make investing simple. Charlie Munger once said the best thing to do is to “sit on your ass” and let your capital compound without much stress…
Summary: S&P has an estimated P/E of 23 for 2020. Rich valuations sometimes make the best companies’ share price languish. Low interest rates justify high valuations. Indexers might suffer more from high valuations than active investors. How important are growth and valuations? I look at theoretical returns under different valuations and growth. It turns out…
This week I was interviewed about my trading philosophy. In the interview, I mentioned how difficult it is to make money daytrading or swingtrading for short-term profits. This is mainly a zero-sum game, I will even say it has negative expectancy due to commissions and slippage. Opposite, long-term investing has a positive expected return, given…
Most traders and investors have heard that you need to sell in May and go away. Is this just a myth or is it correct? Let’s find out by looking at the historical numbers: My data is the S&P 500 index from 1960, downloaded from Yahoo/finance, until the end of April 2020. The index doesn’t…
Warren Buffett, the Oracle of Omaha, has been a strong advocate of buying only what you truly understand and only companies where you can estimate future earnings with a certain degree of accuracy. This requires that you only invest in companies that are within your circle of competence. I guess all of this is well…
A certain group of stocks has outperformed the rest of the stock market by a wide margin: Sin stocks. We can also label these stocks “unethical stocks”. Sin stocks outperform the market because the industry has high barriers to entry, has high margins, requires little capital, the products are addictive, and regulation leads to oligopoly…
If you’re a future net buyer of stocks you want to pay as little as possible for the earnings. Let me explain why: Let’s assume you buy Disney at 100 and one year later it trades at 130. A 30% return in one year, isn’t that great! Not necessarily: A high share price is not…
Now is a good time to start a diary Now is a good time to start a diary. It doesn’t have to be long. But there’s a good chance you’ll tell your grandkids about these days. Also remember that it’s hard to un-remember what you know about the past when looking back on it, so…
As of writing most stock markets around the globe are down around 30%. That is a big decline, especially considering it happened in just three weeks. However, unless you are about to sell assets today or in the very near future, for whatever reasons, you should consider the drop as an opportunity to add to…