New on Money Terms
The latest additions to Money Terms are:
- passive investing, which adds a more general discussion to subjects already coverd by other entries,
- the closely related trio of crash, correction, and bull run,
- an explanation of what embedded computers are.
A better PEG ratio
While making some improvements to the Moneyterms explanation of the PEG ratio, I started thinking about ways of addressing the weaknesses of this ratio. The main problem with it is its short term nature, which makes shares that have mere enjoyed spikes in their growth, look like bargains. (more…)
Northern Rock should have been allowed to fail
Willem Buiter is quite right to criticise the Bank of England’s bailout of Northern Rock. The message to bank directors and shareholders is quite clear: “take big risks, and if they go wrong the taxpayer will pay for your mistakes, if they work, you can keep the profit”. (more…)
New Moneyterms site
I have moved Moneyterms to new hosting and to the wonderful Modx platform. The time spent developing the new site was minimal, but I also replaced all the automatically generated “related page” links with manually chosen lists, which was a lot of very tedious work. It should improve site navigation.
I also removed the “Guides” section, as it was simply not good enough. It will reappear with rewritten material.
Now that is behind me I have started adding new entries again, starting with style index, discount rate, long term PE, market neutral and synthetic security.
Actively manage your pension
Most people are quite happy to allow a fund manager to look after their pension, even those who actively manage other investments. I suggest the opposite. There are very good reasons for concentrating on your pension. (more…)
More bull market?
FT Alphaville is skeptical of Morgan Stanley strategist Teun Draaisma’s bullish outlook. Looking at the arguments he makes in detail, I think he has a point, although I would be more worried about the downside. (more…)
Wogen not irrationally priced
Richard Beddard appears to be willing to agree with me that most active investors will under-perform. We still disagree about how investors’ chances of out-performing are. Richard has focused on a particular company , Wogen, as an example of irrational underpricing. Naturally, it is now essential that I poke a few holes in his bullish analysis. (more…)
Lifecycle investing: when to switch?
The comments on a recent post questioned whether life cycle investing is a good idea. I think the idea is sound, but I think it is important to point out that thinking purely in terms of terminal wealth at retirement over-simplifies things. (more…)
Choosing tracker funds
In a comment on my recent post on why investor’s should not try to out-perform, Robin Sole brought up the important issue of how to choose tracker funds, and the lack of a good totally passive approach to investment. (more…)
What to avoid: Large cap growth
Given the size effect and the value effect, it would appear that the worst investment style is large cap growth. I spent some time looking at returns on the French Fama research portfolios and both effects seem to hold, but with some interesting twists. (more…)
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