What I Have Been Reading – May 2021

Why We Invest? The S&P 500 has been compounding at 14% per year over the last ten years. That rate of return, which was not expected by anyone and should not be expected going forward, turns $100,000 into $370,000 if left alone. There have been people doing their best to talk you out of taking stock market risk, or convincing you that you could hedge it away while still earning the same (or better) returns. This is now and has always been a fantasy – risk-free reward is the domain of the charlatans. It only exists on Twitter, not in real life. Stock market returns took your savings from ten […]

May Stock Market Purchase – Be Selective

Four years ago Hendrik Bessembinder, a finance professor at the Arziona State University, published a very interesting paper on stock market returns. It showed that despite the tremendous stock market gains over the past century, most stocks are actually duds. In fact, of the roughly 26,000 stocks listed between 1926 and 2016, more than half lost money or did worse than holding one-month treasuries. Yikes!   On the other hand , just 4% of stocks accounted for all the net wealth creation over this time, roughly $35 trillion!   Bessembinder added to his work in 2019 by looking through an international lens. It makes for even more stark reading. About […]

Finding Value In This Crazy Bull Market!

March 2020 seems a very long time ago. Over a year ago, the markets had dropped 30% in just 20 trading days to make it one of the fastest bear markets dropped ever. The drop was so severe and the panic was so substantial that there was calls to shut down the stock market! Blood was truly in the streets.   Fast forward to today and the complete opposite has occurred. There is total euphoria in the markets. Markets have rocketed from the lows of March 23, 2020 to todays heady heights. The Dow Jones Index is up 80%. The S&P 500 is up a similar amount. The Nasdaq is […]

The Best Tips To Teach Your Kids About Investing

We all know that the easiest way to get rich is to start investing early and let your returns compound over time. The only problem is that it is hard getting the youth interested enough to get started on their wealth building journey. They are more likely to watch the news than actually learn about investing and the benefits it brings.   In my experience, the best ways to teach kids about investing is to make it relevant and fun.   A good example for this is having a discussion with them on whether they would buy Sony which makes PlayStation or Microsoft which makes the Xbox. Ask them about […]

April Stock Market Purchase – LSEG

Global stock markets have been a bit mixed during April, though the FTSE 100 and FTSE 250 have posted positive returns. Reopening optimism continues, somewhat tempered by the announcement of further lockdowns in Europe following a rise in cases, and a less positive trend in economic leading indicators versus expectations. Metal and energy prices continue to rise thus propelling the commodity heavy UK markets higher.   Apart from macroeconomics, what has lead the UK markets higher in April is the beginning of the new ISA season. With individuals being given a fresh £20,000 allowance they could invest tax free, money came rushing in to the markets and propelled them higher. […]

What I Have Been Reading – April 2021

Stock Market Crashes During Economic Booms The higher real GDP growth goes, the higher average annual stock market returns tend to go. The highest growth with a down stock market came in 1941 when GDP was up double digits year over year while the S&P 500 finished the year down almost 11%. This was an instance in which investors were spooked from World War II. Otherwise, stocks have generally seen strong returns when economic growth is so high. In seven out of the 11 years when real GDP growth was 8% or higher, the stock market was up double digits. So it’s relatively rare for the stock market to fall […]

7 Pillars Of Investment Wisdom By Charles Plowden – A Senior Partner at Ballie Gifford

Ballie Gifford are the epitome of a good fund management business. They value performance over fund inflows. They invest for the long term. They are no star fund managers. Instead, they follow a well defined process. A process that has lead to their funds having some of the highest returns in the past decade. Anything Ballie Gifford puts out is a must read. And when a senior partner speaks, you better take note. These are the 7 Pillars Of Investment Wisdom By Charles Plowden, one of only two senior partners at Ballie Gifford.   Start with a blank sheet of paper. Invest in what you think are the best companies, […]

First Quarter 2021 Dividend Income

It has been an interesting start to the year. From the doom and darkness of January to the sunshine and hope of spring. January seemed to go on forever. The darkness and lockdown did not help. The days were all the same. There was no end in sight. But as I type this, I ask myself the question ‘ where has the time gone?’ I can’t believe we are already a quarter of the way through the year. Time seems to be flying. Having not done or achieved much doesn’t help in that sense. But I do hope better days are ahead.   In terms of the markets, Quarter 1 […]

ISA 2021/2022 – Invest £20,000 Tax Free

Happy new tax year!   Well, I know what you are thinking, happy and tax should never be used in the same sentence! But in this case I can be forgiven for doing so. The start of the new tax year brings with it the opportunity to invest an amount up to £20,000 completely tax free using an Investment Savings Account. If that doesn’t get you excited, I don’t know what will!   The easiest way to describe an Investment Savings Account or an ISA for short is as a legalised tax heaven for the average person like you and I. When you invest via an ISA, you are able […]