What are your Investment Rules?

[kiora]

First question: is there a financial bubble?

"Recession forecasts have been wrong for years. Here's why a 'perfect indicator' doesn't exist."

https://finance.yahoo.com/news/reces...090047128.html

""Most of the recent recessions we've had were the result of a bursting of a financial bubble," Pearlstein said. "And none of these economic data really speak to that.""

""almost every recession indicator has not survived the next recession."

""If you know how dice [work], that doesn't help tell you what number is going to come up on the dice, but it tells you how to gamble, and, more importantly, how not to gamble," Furman said.

This comes back to the truth about recession indicators: They can be right for a long time. But anyone who's ever been on a trip to Las Vegas knows that no one can guess correctly where the dice will fall forever."

[kiora]

"6 key metrics every dividend investor must track"

https://www.sharesight.com/blog/6-ke...rm=Read%20more

"It should be noted that in isolation, dividend yield is not a very useful metric. Dividend yields can increase if either the dividend payout increases or if the share price decreases. And if the share price decrease is due to a fundamental issue with the underlying business, then you are buying into an underperforming company. Hence, the term dividend yield trap."

"6. Total annualised return
While this is not a pure dividend metric, it’s an important and comprehensive one that tracks the overall performance and health of the portfolio. As you can see from the key drivers of the annualised return, dividend return is just one of the components.

The main components that go into an annualised return are:

Capital gains
Dividends and distributions
Currency fluctuations
Brokerage costs
Time"

[kiora]

"New Zealanders are falling short on retirement savings – is it time to boost KiwiSaver contributions?"

https://www.interest.co.nz/personal-...September+2024

Rather than looking at increasing contributions what about looking at increasing the returns by scrapping the default funds

"This may seem like a minor detail, but the monetary reward (or cost) can be massive. On average, you could have $135,000 more in your KiwiSaver account when you reach 65 just by switching from a conservative to a growth fund. "

https://sorted.org.nz/blog/not-all-k...-are-the-same/

[kiora]

"Charlie Munger Claimed 'People With High IQs Are Terrible Investors' – According to Him, This Trait Is More Important Than 'Brains'"

https://finance.yahoo.com/news/charl...145641337.html

" "A lot of people with high IQs are terrible investors because they've got terrible temperaments. And that is why we say that having a certain kind of temperament is more important than brains." So, while intelligence is great, how you handle stress and setbacks might matter even more."

"Warren's way of managing businesses does not take a lot of time. I would bet that something like half of our business operations have never had the foot of Warren Buffett in them."

" "Three great businesses will be better than 100 average ones.""

"He calls out the flaws in "Modern Portfolio Theory," stating, "You cannot believe this stuff ... It will tell you how to do average.""

"

[kiora]

"8 leading investors share the lessons they learned on their way to the top of their game"

https://www.livewiremarkets.com/wire...OM%20THE%20TOP

"The most important thing for us is thinking long term. Make sure you think long term and if you are, the natural addition to that is to buy quality. Rather than trading stocks, buy businesses for the long term and think like a business owner rather than a trader. There are lots of people who can trade, to be fair, but our game is to think long term and buy businesses that you understand.
Don't buy stuff you don't understand, just like a business owner. You [in reference to interviewer James Marlay] stick to your business. You won't do anything apart from media - stick to your core business.
Most importantly, don't get sucked into hype and stories. There are always promoters out there who are going to sell you the latest theme and the latest story. But more often than not, I just run a mile. They're trying to sell you products rather than decent returns. Finally, buy at a decent price. Generally, that means buying when everyone is feeling negative."

""A line of interest is everything - Follow the money. I work out that whether you're investing in a fund, a private company or a public company, you need to know where your money is going. Is it allowing people to take money off the table and leave you stranded? Is it to help grow the business? Is the management team aligned with you, in terms of owning the same instrument you own? That is, fundamentally, the biggest lesson I give to all of my team. If you don't know who the sucker is on the table, it's probably you."

""I think I would say something that my original mentor [Grant Lindsay] said at the beginning. He was a people person and espoused that markets are about the summation of the actions of people. Don't view the world through the lens of an index but rather, view it through the lens of the world around you and observe what people are doing, what they're buying, the way they're behaving, the companies they are using, and the things your kids are interested. That will give you clues as to what is going on then do your research and fundamental fact-finding for all of that. You can learn a lot just by keeping an eye out and listening to them."

[kiora]

One swallow does not a summer make, neither does one fine day; similarly one day or brief time of happiness does not make a person entirely happy.” Attributed to Aristotle. It basically means that a single instance of something doesn't indicate a trend.


"The Future Fund’s big hedge fund bets are paying off"

https://www.afr.com/markets/equity-m...0240905-p5k8ab

"In April last year, the Future Fund made a big statement. Having sacked all of its stock pickers in 2017, it proclaimed that active management was back."

"half of the $18.8 billion of gains in the portfolio in the 12 months to June 30 could be attributed to active decisions either by the fund or its hired managers"

"most global fund managers are now failing to outperform their benchmarks"

"If there is a bubble in big tech, he says, it’s not a valuation bubble but an earnings bubble as their share price appreciation has broadly tracked their growth in profits."

"A year in which fund managers largely failed to beat the market but stock-picking hedge funds succeeded in such scale should also force us to reframe the active versus passive debate. There are clearly mispricings that can and are being exploited."

[kiora]

"Is the stock market about to crash? How to spot the next bear market in advance"

https://www.livewiremarkets.com/wire...THE%20INSIGHTS

"Starting point: Zoom out!"

"the natural state of the stock market is an uptrend. Bear markets are important – they’re the bits we’d ideally like to avoid – but usually, the stock market is a pretty good place to park your money.

Bear markets are typically defined as “A fall of 20% or greater from a market top”. Similarly, by definition, a bull market therefore begins after “A rise of 20% or greater from a market bottom”. You may also have heard the term “correction” being used in the media. This is typically defined as “A fall of greater than 10%, but less than 20% from a market top”. Finally, a “pullback” is defined as “A decline that is less than 10%”."

"The good news for investors is that so far, the key technical factors I use to identify a bull market transitioning to a bear market are largely absent. Most importantly, the long term trend ribbon is still offering dynamic demand (note how perfect it was at repelling the July-August pullback). This means that we are potentially at least weeks or even months away from the price action interacting sufficiently with this zone to confirm a potential transition to long term downtrend."

[kiora]

"Suze Orman Isn't Wasting Money On Insurance For Her Condo – 'I'm Not Paying $28,000 A Year When The Insurer Will Probably Contest Any Claim"
Luckily for Orman, she can self-insure, meaning she doesn't need the policy. But her worry? Most Americans aren't in the same boat, and she's worried this insurance crisis could push the American dream of homeownership even further out of reach"
"
"Orman warns that if these insurance prices keep climbing, many will think twice about homeownership. "Real estate is unpredictable. I never would have thought to advise homebuyers, ‘Oh, you better make sure you can afford a quadrupling of property insurance in the future,'" she added.

For many homeowners, though, there's no escaping these costs. If you're buying a home with a mortgage, you can't close the deal without insurance. Orman, however, owns her condo outright, so she can opt out. Her choice? Skip the $28,000 a year premium. "I'm not paying $28,000 a year when the insurer will probably contest any claim I get anyway," she said bluntly.

Wildfires, floods, and tornadoes are occurring more often, forcing insurers to raise premiums or leave the game altogether. Allstate recently approved a 34% increase for California homeowners, taking effect in November. In June, State Farm increased rates in the state by 30%."

[kiora]

"Quote of the week



“Risk more than others think is safe. Dream more than others think is practical.”



Howard Schultz"

[kiora]

"Why Ken Fisher Says 'Capital Preservation' Could Cost You Big In Retirement

https://finance.yahoo.com/news/why-k...171519786.html

Legendary investor Ken Fisher has a message for retirees and those planning for retirement – the allure of "capital preservation" might be setting you up for financial disappointment.

Fisher, known for his no-nonsense approach to investing, argued in a New York Post opinion report issued on Monday that the concept of capital preservation – often touted as a haven for retirement savings – is fundamentally at odds with the growth needed to sustain a comfortable retirement.

“Growth and true capital preservation can't coexist in the short run,” Fisher explained. He said that what many consider "safe" investing strategies often fail to keep pace with inflation, potentially eroding purchasing power over time.

The center of Fisher’s argument lies in the role of market volatility. While many investors view volatility as a threat, Fisher sees it as essential for long-term growth. He said that historically, U.S. stocks have risen in 63.1% of calendar months and 73.5% of calendar years from 1925 to 2023.

“Eliminate the [downside] and the [upside] also disappears,” Fisher said. He argues that attempts to completely avoid market fluctuations typically result in ultralow returns, barely outpacing – or even trailing behind – inflation.

The investor aimed at financial products promising growth and capital preservation, calling them "phony."

"Investment strategies promising both growth and capital preservation are phony baloney," Fisher opined. "Yet so many vendors in varied forms – especially in rocky times like this summer's – claim otherwise, peddling poor products destined to disappoint.

He warns investors to be particularly wary of insurance-like “buffered” funds and any product claiming “upside with no downside.”

Instead, the investor is advocating for a clear-eyed approach to retirement investing. He urges investors to understand that short-term volatility is the price of admission for long-term growth. For those who can’t stomach market ups and downs, he suggests reevaluating financial goals, savings rates and future spending plans.

The veteran investor’s advice comes when many retirees grapple with economic uncertainty and market turbulence. While the desire for stability is understandable, Fisher’s message is clear – playing it too safe could cost you big in the long run.

As retirement horizons lengthen and the cost of living continues to rise, Fisher’s perspective offers the insight that there are no guarantees and that pursuing growth often requires embracing, rather than avoiding, market volatility."