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PaperclipPerfector  1yr ago (text post)   3203 thread views

Small-Scale Question Sunday for October 15, 2023

Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?

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Benjamin Graham's The Intelligent Investor. I had procrastinated on getting started with learning about investing for too long, and finally started reading a book on the subject. So far I like the commentaries more than the original chapters that were written in, I think 1949 and updated in 1972. The financial results of 1965-1970 feel distant and seem less relevant to me. But I like the sober, honest tone of the book and hope to take timeless wisdom from it.

I read this recently as well. I'd echo that the book feels like ancient history. Graham recommends a 50-50 stock bond split which would have been disastrous over the last 20 years. Zero interest rate policy has made bonds an extremely poor investment vehicle. The risk of holding 0 coupon bonds is huge, while the reward is tiny. People who bought that paper lost their shirts.

Graham would probably agree if he were alive today!

As an investment guide in 2023, I didn't find much value honestly. The good bits have already been distilled into common wisdom.

Were there any chapters in the book that you found worthwhile to read?

I've started on A Random Walk down Wall Street and I like it. Might go back to Intelligent Investor for a couple of chapters. I think 8 and 20 were praised by Warren Buffett.

I can't remember unfortunately.

There is a very important general point here, which is that if asset markets are telling you to adopt a particular investment strategy, and you do not have a good personal reason not to, then you should do what the markets are telling you.

Low interest rates (strictly speaking, low real interest rates) are asset markets telling you to invest in real assets (equity of non-financial companies, real estate, your own business) and avoid financial assets (bonds, cash, arguably bank equity, at the margin even paying down debt). The market is telling you to invest in real assets because not enough other people are, so if you follow the market's advice both you and society should benefit.

What I want to know is how you become a market-whisperer who can discern what they are saying. :D

This is a solid book. I also recommend Peter Lynch’s One Up on Wall Street if you’re interested in more investment books.

Thanks for the rec!

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