What caught my eye this week.
Those of you who frequent the naughty side of town – indulging in active investing despite being clued-up followers of a website that urges a passive approach – will enjoy Conor Mac’s reflections over on Investment Talk this week.
Why doesn’t he just sell all his individual stocks and go buy an ETF, Conor asks?
He’s no dummy. He knows the odds against outperformance and understands that:
To a layman, an investor’s dedication to beating the market over their lifetime appears absurd. The trade-off, time spent doing other things, is huge.
We each have a finite amount of time on this earth. To spend countless hours which I assume add up to years of one’s life, only to underperform the market, may appear wasteful. Insanity is repeating the same thing hoping for different results. Consider the aggregate of individual investors trying to beat the market. Most will fail.
Thus, on the aggregate level, these people look crazy.
So why indeed?
But for the benefit of newer readers – please know that I’m not judging.
I’m an active investor myself, and long ago debated the reasons why with my sensible and purely passive co-blogger.
Five star generalisations
Moreover something I love about the active investors among our Mogul membership is how self-aware they (you?) seem to be too.
Of course we’ve filtered hard for this kind of member. Both by sneaking them in through the backdoor of a blog about using index funds and also by stressing Moguls will not be promising Five Stocks To Pay For Your Porsche or the like.
I’m also aware that more than a few Moguls members just wanted to send a few extra quid our way, despite being entirely passive investors themselves. For which, enormous thanks!
Anyway, the end result is I don’t get the impression that our members expect easy or even especially probable wins.
Rather, active investing for them is a challenge or a passion or a hobby – but one with the tantalising if slim potential to deliver life-changing results on the side.
Indeed it’s possible Moguls will turn out to be a multi-year version of Conor’s reflective post.
For my part, active investing – stock picking – has been an endlessly fascinating game, that’s also gamified my wondering about the world around me. For most of the time I was fortunate that it was more profitable for me, too, though as I’ve conceded elsewhere the last 18 months has been testing that one hard.
Perhaps for you there are different motivations?
Or more likely you’re one of the Monevator majority who’s sensibly all-in on a global tracker fund and you think we’re crazy.
Which is more than fine, too, if expressed politely. Broad church here!
Active addicts should go feel seen at Investment Talk. I hope the rest of you enjoy cracking into this week’s links below.
Best of luck to Wales, England, Scotland, and Ireland in the games today!
The Slow & Steady Passive Portfolio update: Q3 2023 – Monevator
How to enjoy life like a billionaire – Monevator
From the archive-ator: How unmarried couples can protect their finances – Monevator
Note: Some links are Google search results – in PC/desktop view click through to read the article. Try privacy/incognito mode to avoid cookies. Consider subscribing to sites you visit a lot.
Buyer’s market fuels fastest fall in UK house prices in 14 years – Guardian
Troubled Metro Bank kicks of £3bn mortgage book sale – Sky
Portugal to scrap ‘unjust’ tax breaks for foreign residents – Guardian
Bed bugs threat from Paris? They are already here, say experts – Sky
London has just been named the best city in the world – TimeOut
Families should have more children to care for elderly, says minister – Guardian
Top 10 places to retire in the UK, rated – Which
Why a rout in global bonds is worrying – Reuters
Products and services
Starling Bank boosts current account interest to 3.25% – Which
NS&I pulls top fixed 6.2% savings rate after 225,000 sign up – This Is Money
Blackrock launches the first defined-maturity TIPS ETFs [US but notable] – ETF.com
Open an account with low-cost platform InvestEngine via our link and get £25 when you invest at least £100 (T&Cs apply. Capital at risk) – InvestEngine
Simple trick to secure best buy Natwest easy access account rate of 5.2% – This Is Money
British Gas extends half-price electricity on Sundays offer this winter – This Is Money
Get £50 free trading credit when you open an account with Interactive Investor. Terms apply – Interactive Investor
What’s happening with buy-to-let mortgage rates? – Which
Homes for sale with a blue plaque, in pictures – Guardian
Comment and opinion
Seven beliefs about money – Of Fortunes & Frictions
At long last, bonds once again matter – Morningstar
How to make the right type of withdrawal from your pension [Search result] – FT
I’m wealthy if I can… – Thomas Kopelman
Five years of FIRE. Was it worth it? – Far and Wide
Retiring to a cabin in the woods – Financial Samurai
Can you make money ‘stoozing’ with a 0% credit card? – Which
The thin line between bold and reckless – Morgan Housel
Even a successful financial life will take a few hits – Humble Dollar
Asset class CAPM – Verdad
Three things investment people hate to admit – A Wealth of Common Sense
Charted: retirement age by country [Infographic] – Visual Capitalist
Naughty corner: Active antics
The importance of an economic moat – Flyover Stocks
Ruffer’s recession red flags and four moves to protect against them – Trustnet
Looking for an edge – Humble Dollar
Saddling up for the unicorn massacre [Search result] – FT
The top 40 high-yield blue chip UK stocks – UK Dividend Stocks
Kindle book bargains
The Simple Path to Wealth by JL Collins – £0.99 on Kindle
Mastering the Market Cycle by Howard Marks – £0.99 on Kindle
The Power of Moments by Chip and Dan Heath – £0.99 on Kindle
Think and Grow Rich by Napoleon Hill – £0.99 on Kindle
September 2023 hottest on record by ‘extraordinary’ margin, say scientists – Sky
Cheap heat pumps on offer from energy firms – This Is Money
Britain’s greenest banks – Which
10,000 ‘superhero’ oysters seed a new offshore reef in the North East – ZSL
Are we outsourcing pollution? – Klement on Investing
Countries pledge $12bn to fund coral reef protection – Reuters
Robot overlord roundup
Excogitation – Indeedably
The AI boom-bust – Dror Poleg
Unbundling AI – Benedict Evans
Hallucinating machines [Search result] – FT
Off our beat
“Managed decline“: the uncertain future for British rail after cuts to HS2 [Search result] – FT
Respect and admiration [Podcast] – Morgan Housel
The nuanced impact of working from home on productivity – The Hill
The truth is always made of details – Raptitude
Fooling ourselves – Seth Godin
Are you old, globally-speaking? [Interactive tool] – Population.io
How a big pharma company stalled a potentially lifesaving TB vaccine – ProPublica
Discover your innate personality trains [Fun personality quiz] – Taiwan Design Expo
Full-time children: the 20-somethings who never grow up – Guardian
“Money is, in other words, an entirely social phenomenon. If Jeff Bezos was to avoid a nuclear war by escaping to a bunker on his secret island lair and then emerge a year later as the only surviving human on earth, his billions of dollars would be of no value whatsoever; with no one to trade with, money is useless. Imagine he then wandered the earth and came across a primitive Pacific tribe that had somehow survived, and who exchanged value by sharing the prettiest shells they can find. Jeff could show them wads of paper with pictures of Benjamin Franklin on them, but it wouldn’t get him very far.”
– Rob Dix, The Price of Money
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