Investment Strategy

My selected Top 10 reads of 2018

Buenos Aires, Argentina

We’re rapidly getting close to the end of the year. And, let’s face it, it’s been a tough year for investors. Most major asset classes are down, whether stocks, bonds or commodities…especially when measured in US dollar terms. The year 2018 of the Gregorian calendar has truly been “the year of the US dollar”.

As with all years, the OfWealth Briefing has covered a wide range of topics. I hope that you’ve found it useful. Today, I want to give you a little reminder of some of the things that I’ve looked at.

The topics change, but the underlying aim is always the same: to discover and learn about what it takes to protect and grow invested wealth. Below are my selected Top 10 reads of 2018.

  1. How many different stocks should you own? The right number of individual stocks depends on what else you own. This takes a look at some scenarios.
  2. Investment lessons from the Mona Lisa. A valuable investment lesson from “old big hands”, during a winter trip to Paris, France.
  3. Is the market’s debt orgy reaching a climax? A look at how debt props up stocks in various ways, and how high debt levels often coincide with stock market peaks.
  4. Who wins the race: the investing tortoise or the trading hare? Important distinctions between short-term trading and longer-term investing, including the personalities and time required to be successful at each. In particular, why slow and steady usually wins the race.
  5. Why dividend “yield on cost” is irrelevant. There are many popular investment ratios. Dividend yield on cost provides comfort to many investors, when they review longstanding investments. But it tells us very little about whether an investment will be attractive in future, which is what counts.
  6. A snapshot of the state of the World (in charts). The big trends matter when setting investment strategy. This looks at some of the biggest ones, with the aid of charts.
  7. Faking GDP growth: in the US and elsewhere. Politicians, the world over, prefer short-term expediency to dealing with big, structural issues. The illusion of economic growth can always be achieved with deficit spending, which adds to government debt levels. But, history teaches us that it’s unlikely to end well.
  8. Why consistency beats shooting for the moon. This explains why the core of all investment strategies should be built around solid investments. Taking a purely speculative approach is both slower to deliver, and much higher risk, even if it does work out in the end.
  9. Busting some myths about stock buybacks. Quite rightly, a great many stock investors focus on dividend income. But, especially in the US, companies distribute huge amounts of cash in the form of stock buybacks, which are harder to analyse and understand. Buybacks are often used to boost earnings-per-share (EPS) over time, giving the illusion of business growth where there is none.
  10. What causes a financial crisis? Too much faith or too little? I happen to live in Argentina. Given its volatile political and economic history, it’s the perfect place to learn about financial crises. In fact, it had a currency crisis this year. The Argentine peso lost over half its value against the US dollar. The Argentine people have learnt, the hard way, to have little faith in the system. People in many countries remain complacent, and have too much faith.

I hope you enjoy these articles. Remember, the OfWealth website is a rich resource for all past articles. Try searching by category or topic, and you should find much that’s useful.

Stay tuned OfWealthers,

Rob Marstrand

robmarstrand@ofwealth.com

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Rob is the founder of OfWealth, a service that aims to explain to private investors, in simple terms, how to maximise their investment success in world markets. Before that he spent 15 years working for investment bank UBS, the world’s largest wealth manager and stock trader with headquarters in Switzerland. During that time he was based in London, Zurich and Hong Kong and worked in many countries, especially throughout Asia. After that he was Chief Investment Strategist for the Bonner & Partners Family Office for four years, a project set up by Agora founder Bill Bonner that focuses on successful inter-generational wealth transfer and long term investment. Rob has lived in Buenos Aires, Argentina for the past eight years, which is the perfect place to learn about financial crises.