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Why Debt Is Like Russian Roulette

Why Debt Is Like Russian Roulette

Since the mid-1950s, global indebtedness has exploded to record levels. At the beginning of 2019, the IMF reported global debt reached an all-time high of $184 trillion in nominal terms at the end of 2018, equivalent to 225% of 2017 GDP. On a per capita basis, the world’s debt now exceeds $86,000, which according to the IMF is “more than 2½ times the average income-per-capita.” Further data show that the private sector’s debt has tripled since 1950 making it “the…

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Lessons From The Collapse of Flybe

Lessons From The Collapse of Flybe

There are only two things investors can control when it comes to investing in the public equity markets. Firstly, the price paid for the security you have decided to include in your portfolio and secondly, costs. Virtually everything else is uncontrollable (apart from when you sell, but for the purposes of this example, that falls under price paid as they are both interlinked). We don’t know how long it will take for a company to reach our estimate of intrinsic…

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The Permanent Portfolio And Joel Greenblatt’s Big Secret

The Permanent Portfolio And Joel Greenblatt’s Big Secret

I recently wrote an article for Gurufocus.com on an asset allocation strategy called the ‘Permanent Portfolio’ (PP). For readers who don’t know, or who haven’t heard about this portfolio approach before, it was first published in the 1970s by Harry Browne, a U.S. writer and politician (book). Browne’s goal was to create a simple portfolio that would be easy to manage and protect his wealth in all market environments. The approach is simple, Browne recommended investors separate their wealth into…

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Seth Klarman: Approach Investing With a “Strict Standard of Risk Avoidance”

Seth Klarman: Approach Investing With a “Strict Standard of Risk Avoidance”

Investing is hard. To be able to outperform the market consistently, you need to be able to predict the future. Unfortunately, predicting the future is impossible. So, investing is a game of probabilities. Estimating the probabilities of individual outcomes and then investing in the scenario with the highest likelihood of success. As it is impossible to predict the future, it is best to include a wide margin of safety in the calculation of the probabilities. First proposed by Benjamin Graham,…

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Warren Buffett’s 5 Most Valuable Investment Quotes

Warren Buffett’s 5 Most Valuable Investment Quotes

Five of the most valuable pieces of investment advice Warren Buffett has given over the years. These quotes don’t really need much of an explanation, they speak for themselves. They almost entirely sum up Buffett’s investment strategy in less than 1,000 words. I believe that it’s always worth going back to investment advice like this from Buffett, Munger or Graham on a regular basis to refresh my memory and make sure I’m not drifting off track. Warren Buffett Describes How…

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The Best Way To Manage Investment Risk

The Best Way To Manage Investment Risk

What is the best way to manage risk? There are many different views on this subject. Many wealth managers will tell you that the best way to manage risk is to have a well-diversified equity portfolio. The same can be said for fund managers. Another tactic is to invest across different assets with low correlations. And if you are clever, you can use the same approach used by the worlds largest hedge fund, Bridgewater. Bridgewater’s funds are designed to achieve…

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The Best Investment Ideas Should Be Easy

The Best Investment Ideas Should Be Easy

Following on from my last post (Second-Level Thinking: What Is It And Why You Need It) I wanted to take another look at investing psychology, specifically, the emotional bias associated with investment research. Investment ideas should not require a lot of work Researching a stock is a critical part of the investment process, but if you’re not careful, you’ll end up convincing yourself to buy the stock, rather than buying based on fundamental research. To explain further, I’m going to…

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How to Invest the Lazy Way and Beat the Average Investor

How to Invest the Lazy Way and Beat the Average Investor

As I covered in my post on diversification last week, data shows that the chance of finding a long-term winning stock is only around 7%. With this being the case, it makes sense for most investors to hold a selection of tracker funds in their portfolios, rather than trying to beat the market by picking stocks. As the odds are heavily stacked against you, what’s the point of putting in the extra time and effort to find winning equities? Warren…

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Why You Need To Diversify: The Chance Of Finding A Winning Stock Is Just 7%

Why You Need To Diversify: The Chance Of Finding A Winning Stock Is Just 7%

  Investing can be a great way to make your money work harder for you. Over the past 100 years, US and UK equities have returned around 7% to 9% per annum. £100 a month invested at 9% per year will grow to approximately £1.2 million over five decades. However, most investors fail even to make market average returns because it’s so difficult to pick stocks. How to make the most of your skills The world’s best investors have made…

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Warren Buffett Describes How To Pick Stocks

Warren Buffett Describes How To Pick Stocks

Warren Buffett is the greatest investor alive today. After starting with a strategy based on value investing, Buffett’s investing has developed over the years to a more quality-based style, a change that’s produced huge returns for both himself and investors of Berkshire Hathaway. Buffett wasn’t born with all of his investment acumen. Over the years his strategy has developed and changed with experience into what it is today. “In my early days as a manager I, too, dated a few…

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