We all like common stocks, but in this stage of the economic cycle we should also be defensive. Therefore, it’s a perfect time to discuss Chapter 5 of Benjamin Graham’s book The Intelligent Investor – The Defensive Investor and Common Stocks.
The topics we’ll discuss today are:
Introduction
Today, we’re going to continue our review of Benjamin Graham’s The Intelligent Investor with a discussion on the fourth chapter, General Portfolio Policy: The Defensive Investor.
Graham clearly differentiates between aggressive and defensive investors where an aggressive investor spends a lot of time on research while a defensive one enjoys life. No matter whether you’re aggressive or defensive, this chapter is crucial for this environment as being defensive might be the most aggressive thing one can do. More →
Introduction
I love Davos because there is always a Bloomberg interview with beautiful mountain scenery and a freezing Ray Dalio.
Perhaps because of the cold, Dalio always wants to keep the interview as short as possible and spits out all his thoughts on the economy, markets, etc. Some of it will be misinterpreted by the market, but the key message is always extremely important to hear. More →
Introduction
Two and a half years ago, I took out a mortgage with a fixed interest rate (3.55%) even though my friend from the Dutch National Bank was telling me to take the lower variable interest rate (2.5%) because the probability that interest rates would rise was very small and I could always change the variable rate to a fixed rate if necessary. More →
Introduction
Financial bubbles are always repeating. Sometimes they are small, just like the meal delivery businesses (like Blue Apron) craze of the last two years. Sometimes they are a bit bigger, like cryptocurrencies have been lately. Sometimes they are huge, just like the current stock or debt markets. More →
Introduction
“Too big to fail” is a concept that you probably recognize from the 2009 financial crisis when many corporations, particularly financial institutions, were considered too big to fail due to the negative impact their demise would have on the whole economic system.
In order to prevent massive negative effects on the economy, and also to prevent a 1930s depression-style situation, governments intervened and bailed out the distressed assets. More →
Introduction
A friend of mine just sold his home in Central London for 2.4 million pounds which is an average price in London. However, what’s interesting is that he bought the property in 1996 for just 160,000 pounds. In just 20 years, the value of his London property increased 15 times.
Another example I have is from a recent WSJ article where a Park Avenue penthouse is selling for about $18 million. The funny thing is that the property was empty for 27 years as it was owned by the Former Republic of Yugoslavia which also allows us to know what the purchase price was in 1975. The purchase price was $100,000. In 40 years, the value of this property in New York increased 180 times. More →
The Current Bond Environment
Bonds, as stocks, have been in a bull market for the last 35 years because interest rates have been on a constant decline.
Since 1981, a 10-year Treasury bond portfolio has returned 14.6 times its initial capital. More →
Introduction
Yesterday, we discussed how the economy is in the late part of the economic cycle and everything is leading toward a recession.
No one knows exactly when the next recession will start or what the trigger will be. So the only thing to do is to be prepared. More →
Introduction
Last year, I was a bond bear and wrote about how investors should avoid bonds, especially as the FED was announcing a tightening policy. I was right on with my forecasts as bond yields have almost doubled since June 2016 which lowered bond values. More →