I've read a 14 year old report covering the dotcom, housing crisis and beyond looking for the answer to what created shareholder returns in the most turbulent market periods within my lifetime.
Thank you for the thoughtful and elaborate comment Magnus! I agree with what you write, and try to work towards all of these things. Worry less, save better and find my style.
In my first three years of investing I’ve been back and forth on whether to index or invest in companies. After “missing” learning about economics, companies and business I’ve landed on that I want to put the work in 😊
Also, I hope the post doesn’t seem to much of a “I’m worried about what will happen”, as I hope to have constructed a robust portfolio that fits my temperament (as you very rightly point out). My goal was mostly to try to learn something from history that I did not personally experience. As the romans said “if you want peace, prepare for war”. The BCG report is an interesting glimpse into the dynamics of a market I never got to experience.
Personally, what I find most interesting is the time tradeoff between multiple effect on total shareholder returns and revenue growth. The investment time horizon should be central to how one analyse an investment.
This is my advice for young investors after over 30 years of investing.
Rule 1. Invest (at a steady pace).
Rule 2. Worry less about what you invest in.
Rule 3. It isn't a defeat if you find out that investing is not for you. Index funds are a great saving vehicle.
1. If you are interested in economics, markets, and equities, study finance but not primarily for picking the next Nvidia. Study to learn more broadly. Find an investing style that suits your temperament etc. The main point is that you invest and let compounding work for you. Build that savings muscle. When you get older and your pot of money is larger you can employ what you have learned to great effect. It takes time to be a good investor with both ups and downs along the way.
2. Let's say you have invested $1000 in Nvidia, and now you have $2500. This is great! But in a lifelong financial journey this return isn't going to mean much. In the long run it is much more important that you don't forget about rule number 1. The same goes for losses. In the great scheme of things, it doesn't mean much when you are young, still learning, and operate with small funds. You will bounce back. Believe me! Thus, worry less about individual stocks, live more, and focus more on learning than getting rich fast.
3. Investing is not for all. Parts of it can be viewed as boring. Valuation., listening to earning calls, reading quarterly reports etc. If you find that this is too boring. It is not a defeat to just say; I want to spend my time doing stuff I find more fun , sexy, or whatever. Index funds are there for all. You are not going to be the next Buffet by indexing, but you can retire in style just by letting compounding work on autopilot.
Thank you for the thoughtful and elaborate comment Magnus! I agree with what you write, and try to work towards all of these things. Worry less, save better and find my style.
In my first three years of investing I’ve been back and forth on whether to index or invest in companies. After “missing” learning about economics, companies and business I’ve landed on that I want to put the work in 😊
Also, I hope the post doesn’t seem to much of a “I’m worried about what will happen”, as I hope to have constructed a robust portfolio that fits my temperament (as you very rightly point out). My goal was mostly to try to learn something from history that I did not personally experience. As the romans said “if you want peace, prepare for war”. The BCG report is an interesting glimpse into the dynamics of a market I never got to experience.
Personally, what I find most interesting is the time tradeoff between multiple effect on total shareholder returns and revenue growth. The investment time horizon should be central to how one analyse an investment.
This is my advice for young investors after over 30 years of investing.
Rule 1. Invest (at a steady pace).
Rule 2. Worry less about what you invest in.
Rule 3. It isn't a defeat if you find out that investing is not for you. Index funds are a great saving vehicle.
1. If you are interested in economics, markets, and equities, study finance but not primarily for picking the next Nvidia. Study to learn more broadly. Find an investing style that suits your temperament etc. The main point is that you invest and let compounding work for you. Build that savings muscle. When you get older and your pot of money is larger you can employ what you have learned to great effect. It takes time to be a good investor with both ups and downs along the way.
2. Let's say you have invested $1000 in Nvidia, and now you have $2500. This is great! But in a lifelong financial journey this return isn't going to mean much. In the long run it is much more important that you don't forget about rule number 1. The same goes for losses. In the great scheme of things, it doesn't mean much when you are young, still learning, and operate with small funds. You will bounce back. Believe me! Thus, worry less about individual stocks, live more, and focus more on learning than getting rich fast.
3. Investing is not for all. Parts of it can be viewed as boring. Valuation., listening to earning calls, reading quarterly reports etc. If you find that this is too boring. It is not a defeat to just say; I want to spend my time doing stuff I find more fun , sexy, or whatever. Index funds are there for all. You are not going to be the next Buffet by indexing, but you can retire in style just by letting compounding work on autopilot.