I recently watched a talk that I truly recommend. In this video, Bill Ackman tells us how he became a famous activist investor and gives advice to follow his successful path. Inspired by Ackman’s story, I want to share with you how great I find activist investment.
The context: Where Are Activist Investors From?
Majority of Passive Investors
Currently, the majority of investors are passive. They are said to be passive because, although they own large percentage of shares, they neither attend shareholder meetings nor vote resolutions. In other words, these investors have the power to determine companies’ strategies but they do nothing.
I already wrote about bonds. I do it again because bonds are a key instrument to invest when you need your money soon. This article has been inspired by several talks with my father and my reading of The Intelligent Investor*.
When Should You Buy Bonds?
Investor starts with the asset allocation: How much to put in stocks? How much to put in bonds? Asset allocation depends on your current situation and the amount of risk it allows you to take. It does not depends upon your age as common belief often states.
What is a Money Market Mutual Fund?
Money market mutual funds are a good choice of short-term investment. Because they carry negligible risk and are very liquid, they are perfect when you need to spend your savings soon.
The definition of money market mutual funds is simple. A money market fund is a type of mutual fund that invests solely in money markets. Money markets funds buy short-term fixed-income securities with low credit risk.
Money Market Funds Give Access to High Rated Fixed-Income Securities
Money market mutual funds are interesting because they give you access to low-risk fixed-income securities, which usually require high minimum investment.
Risk is key when you invest. When you ask yourself whether you should buy any particular bond or stock, you take into account to points: reward and risk. If the reward—or return on investment—is to low, you will not invest. If the risk is too high, you will wait for another opportunity. Indeed, the more risk you take, the greater are the chances to loose your initial investment.
Here, I will focus on risk. You will earn which are the kinds of risks you have to consider when you start investing.
Read the whole article:
What I Learnt about Investment Risk
(Estimated reading time: 3:42 mins)
Mario Gabelli is a famous value investor (and a billionaire). He considers his investing style as being a mix of Ben Graham‘s and Warren Buffet’s.
Value investors have an interesting decision-making process. It’s worth digging into how they invest. Unlike speculators, value investors look at the stock market as if they were investing in private companies. They analyse companies as if they were private and try not to get biased by how prices on the stock market move.
You’re about learn how a real value investor think and make decisions. So without further ado, here’s what Gabelli can teach you about value investing:
Buying stocks as an investor is exciting and can be quite profitable. In The Intelligent Investor*, Graham recommends defensive investors to have at least 25% of stocks in their portfolio.
The best way to boost your return on investment.
Stocks are most of the time more profitable than bonds.
This article teaches defensive investors how to buy stocks. There are several principles you must know in order to increase profits from your portfolio.
Consider yourself as are a defensive investor, if you do not want to put time and energy in your investments.
After reading Easy Money*, I interviewed Philip Coggan** who is a financial author and a columnist for The Economist. Coggan gave many good pieces of advice on how investors should buy stocks, what you should look at before investing, how you can approach peer-to-peer lending and so on.
He recommends novice investors to start by buying index funds because buying stocks require a deeper analysis that many investors overlook.
Investment Seen by a Financial Journalist
In this short podcast, Coggan speaks about:
- How investors should deal with the current threats on Western democracies
In The Intelligent Investor*, Graham made a great deal of bonds. He explained that bonds should be important part of asset allocation in a defensive portfolio. In this article, you will learn what bonds are, the key principles you should know, and you will find the main resources you should read.
Introduction to Bonds
Bonds are a debt instrument—a fancy IOU—between the borrower (bond issuer) and the lender (bondholder). The issuer—company, government, municipality—pledges to pay the principal (par value of the bond) to the bondholder on a fixed date (maturity date) as well as a fixed rate of interest (coupon) for the life of the bond (Definition).
Today, let’s get great advice from a seasoned professional. We will explain the dot-com bubble, have a thought about the current impressive valuations of tech companies, and get a look at the future of peer-to-peer lending.
I had the chance to interview Philip Coggan*, the author of Easy Money—a book about the dot-com bubble I recently presented. I am delighted to share this interview with you because we have a lot to learn from Coggan.
Coggan has a large experience as a financial journalist. He is currently the Buttonwood columnist of The Economist**. He also worked for the Financial Times for 20 years.
In this article, you will have your first approach of asset allocation. I will focus on defensive investors’ asset allocation. This will interest you even if you consider yourself as an enterprising investor. This article is based on our reading of The Intelligent Investor*.
What is Asset Allocation?
Asset allocation deals with balancing risk and reward by apportioning your portfolio’s assets according to your goals, risk tolerance and investment horizon (Investopedia).
Asset allocation enables to allocate risk
By dividing your assets between stocks and bonds, you can increase or decrease the risk you take. A bigger portion of stocks in your portfolio means more risk. A bigger portion of bonds means less risk.