Novel Investor

Compounding investing wisdom...

What I Learned from the Most Popular Posts of 2017

by Jon

Every year I’m surprised by the posts that get traction and those that don’t. What I think is interesting and spend a lot of time on, can fall flat while something that seems like an afterthought, gets shared everywhere. I doubt I’ll ever figure it out, but I do appreciate it when it happens. So thank you for reading…and sharing.

Like last year, I dedicated most of 2017 to sharing what I dug up and read in books, articles, and interviews of some of the brighter minds in finance.

So what was read the most?

It’s no surprise that articles on the most recognizable investor’s today were the most popular. The lessons from those posts revolve around decision making. Continue Reading…

Happy Hour: Market Outlook

by Jon

With 2017 coming to a close, the forecast machine is working overtime predicting what will happen next year. “The wackier the better” is how the game works because it draws the biggest headlines.

Unfortunately, these people sound sincere, educated, and expert-y, so we’re more apt to believe them.

Don’t.

A magic eight ball is about as useful as the people spewing these predictions. So take it all with a heaping pile of salt. Like the magic eight ball, view it as purely entertainment.

The exception is the outlook reports looking beyond 2018 that take a long-term probabilistic approach. Vanguard – which does a better job than most – released their outlook this week. Continue Reading…

Lessons from Keynes’s National Mutual Speeches

by Jon

I’ve been reading through the annual meeting speeches John Maynard Keynes made during his tenure at National Mutual Life Assurance Society. Several things stood out like his views on the U.S. leading up to and after the ’29 crash or his hot takes on the global economy and how to fix the issues of the time.

Another thing that stood out was how things have not changed much over the years. Sure, it’s easier to invest. It’s cheaper. We have more choices.

But the issues he dealt with and decisions he made are no different than today: things like stocks or bonds, home or foreign, short or long term, and more. And his thoughts on some of those issues are no different than what other great investors repeat all the time: Continue Reading…

Happy Hour: Keynes’s Lesson from ’29

by Jon

Right from the start, Keynes allocated more money to stocks. That was his first big move as Chairman of National Mutual.

For an insurance company at the time, it was significant. Yet, it was still a small portion of the total funds. The average insurance company at the time held about a 4% allocation to stocks. Keynes bumped it closer to 20%.

And it paid off.

Returns averaged more than 7% after tax from ’21 to ’28. The return on the stock portion exceeded that amount over the same period.

In fact, it worked so well that Keynes offered an annual warning about not expecting consistently good returns year after year: Continue Reading…

John Maynard Keynes on Owning a Larger Portion of Stock

by Jon

John Maynard Keynes became the acting Chairman of National Mutual Life Assurance Society in 1921 until his resignation in 1938. Each year, an annual meeting was held in London, where Keynes spoke at length about National Mutual, among other topics.

The time period makes it unique. Britain was recovering from World War I. Markets in Britain and the U.S. were changing. Then the ’29 Crash and Great Depression hit. Of course, we all know how that turned out.

But Keynes didn’t. His speeches offer not only his annual assessment of the events but his thoughts on National Mutual’s investment policy in the midst of it all.

Luckily, The Times of London printed his speeches in full after each annual meeting.

In the very first speech, Keynes lays out the difficulties of investing in an environment with a growing list of new investment “opportunities” and the importance of having an investment policy. Continue Reading…

Happy Hour: Long-Term Thinking

by Jon

One of the things that make Amazon stand out from all the competition is the long-term mindset instilled by Jeff Bezos. Another is the companies ability to fail well.

Their willingness to try a lot of things, knowing they’ll fail at most of them, is what drives Amazon’s success. The reason is that the few rare things that don’t fail have a chance at becoming hugely successful because of that long-term mindset.

Jeff Bezos sat for a Summit event last week to discuss, among other things, failure, regret, long-term thinking, and an inventors mindset. His brother moderated the discussion, making it a trip down memory lane for the two of them. Continue Reading…

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