The investment world is full of BS. More than marketing – if you can believe such a thing. A lot of guys who did relatively well at mathematics consider themselves the smartest guys ever, and so they play, and then they offer you their games for fees, and very often they close. Not just because their next best thing is so shiny and bright, but because… well… face it… what the hell do you know?
If a couple of boys and girls dressed up in thousand dollar suits with very tall offices stride into town with multinational brand names behind them tell you – behold, this is the best possible investment – who am I to disagree. I don’t devise financial instruments for a living. I don’t understand all that jargon. I’d be way out of my depth trying to work out all that weird equations with letters, pi-signs and long division splashed across the page like fortresses. Gotta take them at their word.
And so there’s always the next big thing – the very latest and cutting edge – the incredibly smart and innovative and sophisticated – the new generation – the answer to how the game has changed. And there’s millions to be made, millions, but you have to act now. Crypto and NFT and CDO and CFD and all these wonderful, shiny new things.
In my experience, most people are better off simply investing regularly into the SP500 via an ETF. The way I see it, that gives you the return of the market – the real one, the big one. 500 of the biggest players globally. It’s already very well diversified and it returns steady. It does have the jitters as all equity investing does, but over time the trajectory is up, and that’s all you need. It’s fairly safe too – given how diversified it is. If the entire SP500 crashes, you don’t have to worry about your investments at all. If the SP500 falls, it’s all gone baby – you can worry about water, guns and ammo.
But some folks are smart, and brave, and figure they want to know how to do it themselves. Not just the SP500 – but run their own portfolios.
On the daytrading and quick money side, the game is wholly rigged, you are a sucker, the house always win and you are going to have to be really lucky not to have your ass handed to you. Period. You can’t beat the thousands of smart kids working for Goldman. You can’t beat the supercomputers deployed on the street. You have a snowball’s chance in hell to outperform.
But if you want slow, steady, and wise – there is a man who can teach you things. And some might say you have an advantage over all those big number high tech movers and shakers on the street.
Now, I had some super arrogant trader asshole working at a major South African Bank once pull attitude on me and say that the advice in the book doesn’t work. I ignored him. I’m glad I did.
We’ve all had more than enough of all the ‘we’re so smart and special’ and not nearly enough of reading Benjamin Graham’s Book.
It’s been there since the early 1950s, it retails for less than 30, and it is worth more than a degree in finance when it comes to teaching real, practical principles of actual investing.
I’m going to step back one last time and say most folks, and folks who aren’t into nerdy stuff, are better off simply putting their dough in the SP500. Or spread across a few good mutual funds.
If you’re going to enter this world. you need to be into looking at some numbers.
Benjamin Graham has two books – the first more of an introductory one – the one I’m going to recommend here – and then the more nerdy, more advanced one, which should follow.
The first one is The Intelligent Investor. That teaches the important principles, the correct headspace and attitude, the basics of the value investing approach. It shows numbers collected over decades, details from where the principles were derived.
While there’s been booms and busts, and a whole slew of devastating next best things, the principles of The Intelligent Investor has stood the test of time and offered sound investment strategy advice from day one.
The ideas expressed – divorced from all the numbers and substance – are actually quite simple. Investment and Speculation is not the same thing. What separates them is a margin of safety, the difference between price and value, only buying bargains, staying level when markets swing irrationally. It involves acquiring things for less than they are worth and then waiting until the value moves closer to the price.
That’s it, really. But to take it to heart, to thoroughly understand it, you’d need to read the full volume.
Even if you’re not a nerd, this book will get you thinking correctly about the investing game – certainly more accurately than some hotshot trader who’s since been fired.
From there you can move on to his second foundational book – Security Analysis. By now you should be able to decode the lingo enough and have the right angle of approach.
For investing yourself, Benjamin Graham’s Books are Canon. And despite the shiny, sharklike grin or condescending know-it-all ‘buts’ of your ‘I’m-so-smart-and-sophisticated’ advisor, it is likely to serve you far better.
In life and money – nearly always you’ll be better off if you ignore the next best thing, and simply stick with the best old thing.