Tag: investing

Working Out is like Investing

When investing, you are rewarded for taking risk by an increased rate of return.
When working out, you are rewarded for pushing to your limits and enduring the pain by increased muscle growth and strength.

Only risk that can't be diversified away results in a higher return.
Only pain that can't be avoided by warming up and stretching results in muscle growth.

Invest smart, diversify into low-fee index trackers.
Train smart, warm up and stretch after you are done.

Reading The Little Book That Still Beats the Market

This [cached]short book elaborates on Graham's principle of value investing and puts it into a concrete form, boiling it all the way down to a simple formula you can use for investing: Buy above average companies at below average prizes.

To be more specific, pick a cut off in market capitalization (say 50 million), then rank the remaining stocks based on p/e ratio and return on assets/capital. Buy those that are best when adding both ranks. Gradually phase these portfolio in in groups of a few stocks, then update whenever a stock has been held for one …

Reading The Intelligent Investor

My quest of figuring out how to sensible invest my money continues with [cached]The Intelligent Investor by Benjamin Graham. Regarded as a fundamental work by many, I decided I should read it sooner than later.

It presents Graham's philosophy of [cached]value investing, along with comments from a modern point of view. It became clear very quickly that picking stocks according to these principles is actually quite a bit of work, more than I'm willing to do. Nevertheless, there are a few important principles that hold true for any kind of investment activity.

Portfolio Policy: The Defensive Investor

Start …

Reading Fooled by Randomness

To make more of the books I've read and remember them better, I've started to keep notes while reading. I mostly follow the [cached]procedure outlined on Farnam Street, but realized that realized that publicly posting my notes forces me to put a bit more thought into them. So here we go!

The main point of the book is that we humans are incredibly bad at dealing with probability, our only hope is to acknowledge our weakness and work around it. According to Taleb, the core generator of these ideas:

We favor the visible, the embedded, the personal, the narrated …

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