What caught my eye this week.
Here we are at the end of 2020 2021 – sorry, pandemic brain – and the final Monevator missive of the year.
And what a ride it was!
Remember the meme stock madness? The SPAC boom? The crypto-mania and the pixel painting that sold for millions?
The restaurants reopening and seeing your first menu for six months?
Party-gate, and our GOAT Prime Minister – greatest that is if you’re under-three-years old or you grew up in a Banana Republic?
The past 12 months had the lot.
Luckily reader Tim P. has inspired me to dodge the bullet of pontificating too much about 2021, or getting predictions about 2022 wrong.
He requested last-minute investing book ideas for Christmas presents.
And who am I to forego the chance to embed some Amazon affiliate links?
Those 2,632-word articles on the minutia of withdrawal rates don’t write themselves, you know.
We’ve just been through the weirdest string of short-terms strung together for 24 months that most of us can remember.
And for investors they proved again the value of taking a long-term view.
However you called the big picture, the markets demonstrated themselves to be short-term confounding machines. Again.
Maybe you thought we’d see an economic depression as a novel virus swept around the world?
Or did you foresee the house price boom that actually resulted?
Maybe you predicted an almighty rally in US stocks – even on top of the past ten years of gains and sky-high valuations?
Or did you suppose instead that an insurgency into the White House would rattle US investors?
Perhaps you predicted a fourth or fifth or sixth wave of the virus? Maybe you guessed the UK government would try to renege on its feeble Brexit deal before the ink was barely dry on it?
Maybe, but even the go-nowhere UK market still went up in 2021.
Trying to turn these headlines into profits is a hobby for masochists.
Day-trading is a buzz but a soft drug habit would probably be healthier. Most who try fail to add value. They just make themselves poorer.
Active investors should raise their time horizon, and then double it again.
Passive investors, as ever, would do best to tune out the noise and run their portfolio on rails.
Trust me, in 2021 owning index funds beat betting on interest rate rises or the whims of Reddit board readers.
Have you seen the S&P 500?
All of which is to say (note the seamless transition) that we should be trading less and doing nothing with our portfolios more.
Here are a few investing books to save you – or a loved one – from getting RSI by smashing the refresh button on your share dealing app.
A good book for a totally new investor
Keep things simple by giving a copy of Ben Carlson and Robin Powell’s new book, Invest Your Way To Financial Freedom. Both me and my co-blogger did what they say on the tin in our different ways. It’s not easy, but it is simple.
Why it might have helped in 2021: A well-constructed global portfolio serenely glided higher through bond sell-off fears, market churn, and endless worries about over-valuation. A win.
A book for those who think they know better
I suspect Morgan Housel is our most featured writer in Weekend Reading and for good reason. The Psychology of Money distills a decade of his distilling down centuries of lessons about money into one easy read.
Why it helped: Big picture, everything was rosy in a well-diversified portfolio in 2021. Yet there were still countless ways to lose money. It’s all about behaviour, as Housel will explain.
Next steps for your meme stock trading niece or nephew
The Art of Execution remains my go-to gift for active investors. Plenty of investing books will (claim to) tell you how to find superior share ideas. This is about the only one that explores what to do with them.
Why it helped: By luck – or thanks to reading this book – I sold my accidentally-owned Gamestop shares at the top. Kerching!
For many years we’ve recommended either Lars Kroijer’s Investing Demystified or Tim Hale’s Smarter Investing as complete guides for would-be passive investors. Both books have their problems (I find the latter a slog, personally, though my co-blogger adores it) but for UK readers they’re still hard to beat. If you can put up with stuff about American taxes, you could try The Bogleheads Guide to Investing instead.
Why they helped in 2021: I had a stellar 2020 as an active investor but despite a lot of effort I’ve badly lagged my benchmarks this year. If you’re not doing this because you love it, pick up the market’s return in the time it takes to do a lateral flow test and then head out to do something else instead.
What book to get for The Accumulator
Easy, I bought him Robin Wrigglesworth’s new history of the index fund, Trillions, after he suggested he had better things to do than to read it. The freedom to chase cows wasn’t gifted to us without a fight, The Accumulator!
Why read it in 2021? Index funds continue to take a greater share of the world’s assets, thanks to their low cost and consistent results. Yet they generate few headlines, due to them being crushingly boring. This book helps a bit, by revealing the personalities behind the fund fact sheets.
What to give if you want to give like The Accumulator
Also easy, because The Accumulator kindly sent me two books by financial historian Adam Tooze – The Deluge and Crashed. They cover two economic maelstroms nearly 100 years apart. I haven’t read them yet, but Christmas gift etiquette demands I have to say they’re amazing anyway.
Why they helped in 2021: Those who fail to learn from history are doomed to repeat it, as George Santayana possibly said. Only now with emojis.
Books off our beat
A lovely thing that happened to me this year is I finally got back into reading for pleasure. Here are five of my recent random reads I’d recommend:
Analogia – Pattern-matching earlier innovation to our doom from AI.
Project Hail Mary – Feel-good sci-fi thriller from the The Martian man.
Titan – Not a moon, but the life of John D. Rockefeller by Ron Chernow. Rockefeller makes today’s 0.0001%-ers look like strivers, but it turns out he was just as eccentric. Also I cracked up every time the narrator intoned about his ‘powerful side-whiskers’, like he’s describing an alpha hamster.
The House of Morgan – Another by Chernow (it’s a phase) and at more than 34 hours on Audible a great value history of banking.
Piranasi – Reading and writing can take you anywhere.
In praise of Audible
While we’re talking books, a quick plug for listening to them.
These days I’d be consuming books like a Neanderthal if I wasn’t able to ‘read’ half of them on the move via the Audible app.
We all know it’s hard to get through a book with our Internet-addled attention spans.
But personally I also find it ever-harder to sit around when I could be on my feet and doing something.
A sedentary life is a shorter, unhealthier one. Time is running out, and if I’m going to reduce my lifespan, I’d prefer it was by doing something racier or tastier than reading Tim Hale.
Happily, I’ve found Amazon’s Audible membership service an easy way to keep my book digestion regular.
I’m too stingy to forego the monthly credit that my membership buys – and I’m too tight not to get my money’s worth from anything I’ve bought.
Are you that kind of crazy? Try Audible with a free trial.
Lastly on books, I might as well come clean and admit it now looks like the Monevator book may never see the light of day.
We’ve had it 95% written for a couple of years. But both The Accumulator and I have repeatedly failed to get it finished and out there. Self-publishing it properly involves an ordeal that Reset author David Sawyer has warned me could be a multi-month full-time job in itself.
We both fear such inordinate effort for an uncertain return. We’d truly love to ship 200 copies to our most faithful readers. But what if that was it?
Perhaps we’re being pessimistic – blame the short winter days.
More likely I’ve read too much about sunk cost fallacy to continue.
We’ll certainly publish the text someday, if only chopped up into articles, so do subscribe to our emails. We may turn some of it into PDF downloads, too.
Wake me up before you go-go
On that rather anti-climactic note I’ll slap on a smile and thank you for reading in 2021. We hope you stick around for 2022!
Despite the book debacle the experiments continue at Monevator Towers, so watch this space.
The crazy market isn’t going anywhere, after all.
Stay safe, have a great break, and enjoy the bumper link-fest below. See you in January!
Inflation is right up your street – Monevator
What happened to 2021’s biggest thrill rides for investors? – Monevator
From the archive-ator: Investment trusts discounts and premiums – Monevator
Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1
Bank of England raises interest rates for the first time in three years – BBC
Rail fares to increase by 3.8% in March – Guardian
Mortgage affordability stress test may be scrapped – ThisIsMoney
The increase in UK state pension age could come eight years early – Which
‘Buy now, pay later’ stocks plunge after US regulator launches probe – CNBC
Survey: public has no appetite for a post-Brexit perma-war with the EU – Guardian
Log4J security flaw is prompting 100 hacks a minute globally – BBC
Three secret ingredients of the most efficient portfolios – Portfolio Charts
Products and services
What the rate rise means for your mortgage, debt, and savings – Guardian
Beware the Lifetime ISA trap ensnaring young buyers [Search result] – FT
Major UK banks to roll out shared banking hubs – Finextra
Promo / free money Join the 400,000 people saving with a FSCS-protected Chip account, and we’ll both get a free £10. Download the Chip app here then head to the ‘Promos & Referrals’ section on your profile and enter the code CHIP-EBZ267
Masks are back in vogue, so which one should you buy? – Wired
Reasons why lenders may refuse a mortgage on a flat – ThisIsMoney
Tiny houses for sale, in pictures – Guardian
Comment and opinion
William Bengen: is it now the 3.3% rule? – Advisor Perspectives
“I lost $400,000, almost everything I had, on a single Robinhood bet” – Vice
Has Vanguard lost its way? – Morningstar
Charles Ellis: looking long-term – Humble Dollar
Gamestop et al: the revolution that wasn’t – The Rational Walk
Is index investing still relevant in 2022? – Banker on FIRE
The movement to abolish work as we know it [Podcast] – Bloomberg
What you’re worried about when you’re worried about money – The Atlantic
The Escape Artist and The Mad Fientist: FIRE in the UK [Podcast] – The Mad Fientist
The age of financial misinformation – Of Dollars and Data
Do portfolios have UFO or UAP risk? [Week old, search result] – FT
Billionaires aren’t better looking than other successful people – Klement on Investing
The urgency – Josh Brown
Lessons from a year of semi-retirement at 34 – Humble Dollar
Crypt o’ crypto
What do you buy when you buy an NFT? – Protocol
The Bored Yacht Ape Club is more than an NFT joke [Search result] – FT
Bitcoin could become “worthless”, Bank of England warns – Guardian
Melania Trump has launched her own NFT – via Twitter
Naughty corner: Active antics
Does the market efficiently price the value of brands? – Alpha Architect
The value/growth spread is currently, in short, massive [Graphic] – AQR
A case study in the return gap: Cathie Wood’s ARK fund – Morningstar
Is Ferrexpo a good dividend investment? – UK Dividend Stocks
Retail investors add stability and liquidity to markets – Columbia Law School [Research; h/t Abnormal Returns]
Action needed to limit hospital admission, says Sage – BBC
The maths that explains why Omicron is suddenly everywhere – Slate
Londoners with cold symptoms are more likely to have Omicron – Guardian
Pfizer’s antiviral Paxlovid is nearly 90% effective at preventing severe disease – Guardian
Kindle book bargains
Lab Rats: Why Modern Work Makes People Miserable by Dan Lyons – £0.99 on Kindle
Flash Crash: A Trading Savant, a Global Manhunt and the Most Mysterious Market Crash in History by Liam Vaughan – £0.99 on Kindle
Anthro-vision: How Anthropology Can Explain Business and Life by Gillian Tett – £0.99 on Kindle
Alchemy: The Surprising History of Ideas That Don’t Make Sense by Rory Sutherland – £0.99 on Kindle
Government slashes electric car grant by 40%, tightens applicability – ThisIsMoney
Giant cracks push imperiled Antarctic glacier closer to collapse – Nature
A close encounter with a flame-bright Egyptian vulture – Nautilus
Off our beat
Even the reindeer were unhappy: Britain’s worst Winter Wonderlands – Guardian
Tim Harford: how to give the perfect present… [Search result] – FT
…although maybe it’s time to stop giving presents to adults – Slate
The office is an efficiency trap – Wired
Viral Tik Tok recipes are causing food shortages – Eater
Appraised – Indeedably
“’Bah,’ said Scrooge, ‘Humbug.’”
– Charles Dickens, A Christmas Carol
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The post Weekend reading: Save your Christmas with a good book appeared first on Monevator.
What to get for Christmas for the investor who reads in your life, plus the last list of links of the year…
The post Weekend reading: Save your Christmas with a good book appeared first on Monevator.