Category Archives : Investing Theory

A list of articles on the theory of investing. Articles that give you the knowledge on how to invest. Looking at the Invest Money tab to find out what to invest in.

I Bought More BT Shares – Averaging Down On Your Existing Stock Position 1

BT threw investors a curveball this past month by stating that its Italian business is facing an accounting scandal which has caused the company to write off £530million. Whilst the headlines around the company were focusses around the Italian scandal, BT also reported a deterioration in the outlook for UK public sector and international corporate markets. This has sent shares crashing from 380p to 300p; a drop of over 20%. Readers of this website will know that I first initiated a position in BT in the summer of 2016 for a price of 397p. I subsequently topped up my stake through my monthly stock programme which brought my overall holding […]

The 5 Models To Know If You Want General Worldly Wisdom – A list by Charlie Munger 1

Charlie Mungers philosophy on worldy wisdom is one of the best articles I have ever read. For anyone looking to be better than average, both in a stock picking sense and a wordly intellectual sense, I urge you to read the full article below. I would even go as far as bookmarking this page and having a re-read of the article every once in a while. It is that good. Below is a summary of the piece but do read it in its entirety to appreciate the full wisdom Charlie Munger imparts. Models to to learn for general worldy widsom: Mathematics – basic arithmetic and algebra, decision trees and the […]

Let Capitalism Set You Free – Move from Employee to Owner

There seems to be an ever increasing tide of bias against capitalism. People are increasingly becoming of the view that capitalism doesn’t work. But what they don’t realise is capitalism has allowed people on benefits today to have a better quality of life than the richest man on earth 100 years ago. Think about this for a second. When capitalism took over communism as the default world economic mechanism we saw an unprecedented amount of technological and productivity improvement. Without capitalism we probably wouldn’t have cars, planes, mobile phones, the internet, costa coffee or much else that we love. When people talk against capitalism, they don’t mention the benefits it […]

How Do Equity Income and Accumulation Funds Work? Mutual Fund Investing

When it comes to investing in mutual funds or open ended investments companies (OEICS) as they are called in the UK there are many questions that spring to mind. What is the difference between income and accumulation units? how do I know how the fund will perform? Will a fund continue to earn the same returns the future as it did in the past? Hopefully, this post will aim to answer questions you have on mutual funds. Income Unit Funds Vs Accumulation Unit funds With equity income funds, you get the dividend paid to you. With accumulation funds, your dividends get automatically re-invested in said fund. Yes, you are able […]

To Be a Successful Stock Market Investor Think Like a Business Owner

Modern day stock picking is akin to gambling money in a casino, you place money on a particular ticker symbol and hope that it goes up. How many times have you read an article on that ‘one magic stock’ or seen people speculate on a single stock based on an online forum. The majority of people think that the stock market is a route to overnight millionaire status. The mass media has led people to believe this as they selectively run stories on people who have become millionaires overnight based on a single stock pick whilst sunning the countless others who have lost it all by placing everything, including their […]

Active Investing is Better Than Passive Investing In Overvalued Markets

Regularly readers of my blog will know that I recently moved some money out of a bunch of index funds and into my more actively managed portfolio. I can already here huge ‘sighs’ from the efficient market hypothesis faithful. Investors who religiously believe in index investing will tell you that it is impossible to beat an index fund over a considerable period of time. Whilst I agree with this statement, I also think that you need to use your brain at times and shouldn’t blindly follow any research. You need to be able to critically analyse the results of the research to see in what market environments the thesis or […]

What Stage Of The Bull Market Are We Currently In ?

The current bull market has had a barn storming run and is currently in its 8th year. Typically, when bull market runs get this long and have racked up positive returns of over 200% during this time, investors start to question how much longer the bull has to run. I recently came across a great article which aims to show where the markets currently are in terms of the investment cycle. The evidence currently points to the markets being in the latter end of the mid-staged bull market and about to enter the peak of the bull. When markets normally are about to enter its peak stages, we see heavy […]

Foreign Investors Should Prefer Share Buybacks Over Dividends

The two main ways companies reward shareholders is via dividends or buybacks. There has long been a debate about which of the two is better. Both have there advantages and disadvantages and that is why many blue chip companies use a combination of the two. Buybacks Vs Dividends Dividends – When a company pays a dividend, it is essentially giving a share of its profits to its owners/shareholders. Dividends are usually paid at regular intervals and the best blue chip companies grow their dividend over time. Buybacks – A share buyback refers to the purchase by a company of its shares from the marketplace. As a result of a buyback […]

Should you worry about currencies when investing internationally?

It seems that many currencies have been extremely volatile this year, case in point the pound. Within the space of the past 12 month, it has traded in the range of 0.65 – 0.82 to the US dollar. This is a massive 26% trading range! Whilst a wide trading rage might be normal for currencies of developing economies, it is very rare for the best currencies. And the GBP is not alone. Safe haven currencies like the the Japanese Yen and Swiss Franc have all traded in a wide range against the dollar. Yes you may say that the dollar has been volatile as opposed to the rest but as […]

25 Rules Every Stock Market Investor Should Follow

When it comes to stock market investing, discipline is of the utmost importance. It is important to keep a cool head in both up and down markets and follow the investment guidelines and principles you have set for yourself. Over the course of my investing career (LINK MY JOURNEY), I have set myself a set of rules that I must follow when deciding to make a purchase or sale. Here is the list. Enjoy!  Never chase high flying momentum stocks. Never buy a stock with a PE ratio higher than 20. Focus on the dividend aristocrats and stocks that have increased their dividends every year for at least the last […]