Tag: #2021

The Intelligent Investor: A Review

Brad

I recently completed all 500+ pages of The Intelligent Investor (2003 edition with Jason Zweig). It turned out to be everything that I expected it to be: a collection of sound advice that was well-researched, with all of the main points supported by clear examples and strong logic.

The Jason Zweig commentary following each chapter was welcomed support to what might otherwise be a harder to follow book from a much older generation.

There are no good stocks, only good prices

This was my big takeaway…the key message from the book and one that I needed to hear, when I needed to hear it. It sounds so simple – only buy something when the price is right. As Benjamin Graham rightly points out, Mr. Market is not rational. This could not be anymore evident than it is today as the stock market has been on an absolute tear since it reached bottom in March of 2020. Many of the drivers of investor enthusiasm are well placed making the market’s run-up easy to digest. Now, will it continue to make sense should it continue to blow through the roof?

That’s worth a discussion over beers. At the end of the day, you can’t predict the market.

Hot, hot, hot

I recently changed companies and as part of that transition, I rolled my old 401k, profit sharing, and employee stock ownership plans into a rollover IRA. Thus, I had to exit an incredibly hot market, forcing me to contemplate how best to get back in. I found it quite enticing to start gobbling up the names of some of my favorite companies and brands that I regularly patronize…an urge I knew I must resist.

While it’s a good place to start, due diligence would be required if I were to pick up the new habit of selecting individual names rather than sticking completely with index-based ETFs.

This brings me to my next point.

Speculation

The darlings of today on Reddit’s WallStreetBets will quickly be discarded tomorrow, a vicious cycle of speculation that would likely make Graham sick. His distinction between the speculator and the investor is timeless and ubiquitous. What I was surprised to discover was that he left room for the individual to be both…within reason.

Proportion is the key and knowing which state you’re acting in is critical to ensuring you don’t gamble away your retirement.

In this moment of personal financial transition, I regularly stop and think, what would Mr. Graham do?

What to Expect for 2021

Brad

I’ll admit, the title is a bit misleading…I don’t know what will happen in 2021. In fact, if this year has offered anything it is that it has uniquely reinforced the mantra “expect the unexpected”. Even still, that should be worth something.

What I lack in clairvoyance I make up for in pragmatism. I don’t like unrealistic or whimsical predictions and I am immediately skeptical of viewpoints that have not been fully developed or explored from all angles. I promise not to contradict these personal pet peeves.

2020 has brought with it a global pandemic, an historic economic shutdown followed by an equally historic recovery, unprecedented central bank action, a booming housing market, social unrest, and a divisive election…and this is just the short list.

2021, when we reach the end of it, will have looked something like the following…

Government continued to implement measures to combat the coronavirus and a vaccine was widely distributed; the economy, and more specifically businesses, continued to adapt to the new normal and found unique ways to operate efficiently; new business creation continued, ultimately to satisfy new needs and wants in the marketplace; and life for you and me looked a like it always has…a fairly consistent set of routines and a new set of challenges – both work and personal in nature.

Groundbreaking, right? The only big, fundamental transformation that took place in 2020 was a change in the way we do what we already did. Let me say that again a different way…we still went to work, took care of our families, and went about our lives. Life in 2020 may have looked and felt different – and it was different — but it was more a change in venue (more remote work) and a change in disposition (wearing masks, social distancing).

Now, I don’t want to glaze over the fact that millions of people lost their jobs or that many, many people have become ill or died due to complications surrounding COVID-19. Setbacks and illnesses are not unique to 2020. And that’s sort of the point. Some things are out of our control. What we can do is focus on things that are firmly within our control.

Here’s what I suggest…

Take stock of where you and your family are on a personal and professional level.

  • Am I gainfully employed, or do I need to get creative to keep food on the table?
  • Is my family taken care of, and am I taking the proper precautions to ensure their safety?

If you feel comfortable with your situation, progress to the next level of self-introspection and evaluation.

  • Have I set clear goals for this year? Have I implemented a plan of action for achieving those goals?

Some questions you might ask yourself when developing goals:

  • Am I doing enough to ensure the financial security for my family?
  • Am I doing enough to give back to the community? This could be financially, with your time etc.
  • Am I pursuing a constant state of growth, which might involve reading, working out, taking classes, listening, asking questions, working harder, building a business and so on?

To finish where we began, what you can expect in 2021 is a combination of things both inside and outside of your control. Focus on what you can control, and the likelihood that you have a successful 2021 goes up immeasurably.