Studies of Life

Learning by doing.

Tag Archives for: bonds

How do you know stocks are in a bubble?

05 December 2015 by Jim

A reader, Algirdas, recently left several questions below a post, and I thought the answers might interest most of you, so I decided to answer with another post.

> You said: “Right now, stocks and bonds are pretty expensive. It’s not a good idea to invest all of your money into either category right now, because there could be a big decline soon” How to know when stock market reached the bubble or had a big decline? Maybe you can share a source where you can look the current stock market situation considering the whole stock market performance history? How do you know when stocks are expensive? Or in a bubble? (more…)

How to Start Investing

08 November 2015 by Jim

I’ve been asked by a reader how to get started, and noticed that I haven’t yet talked about this in a general way, because most of the posts here are about specific investment strategies. So here is a more general approach for those who are still looking at how to get started.

# Starting to invest

  1. Earn more money than you spend
  2. Save the difference so you have something to invest with
  3. Invest that money

This is the first, basic set of instructions on how to begin. Before moving on, make sure these three steps are checked off on your list. It’s no use to invest when you spend every dime you earn. Never invest borrowed money! (more…)

Markup / Discount levels for Selling Overdue Loans on Bondora

16 August 2015 by Jim

One of you guys recently sent me a link to a very interesting website (http://bondpicking.com/) that allows you to see charts of the different Bondora loans that were sold on the secondary market, and at what price (XIRR or markup / discount) they were sold. They look like this:

All ratings Bondora chart

Using the current average markup, displayed in yellow on his site, I put together a table of what the average markup currently is. In order to effectively sell, I added 10% to that markup in each case, because it’s just an average, and some loans are more expensive when they’re sold. The table is below. It’s basically -14% for HR, -12% for C-F, -9% for B and -4% for A. (more…)

Quant Investing vs Passive Investing

03 August 2015 by Jim

Maybe all the work you do screening stocks, reading up on quantitative stock picking strategies and other investment details is wasted. Did you ever think about that? John Bogle thinks that Index ETFs are the only way to go for ‘normal people’, i.e. you and me. And he’s smart, really smart (Princeton guy, founded Vanguard) so what he says should be listened to.

I’ve been talking a lot about different investing strategies on this blog, and I’m currently using a portfolio made up of 35% bonds / gold and 65% stocks chosen using the Trending Value strategy (+Piotroski F-Score) presented by O’Shaughnessy. Maybe everything I do is worthless, and the return of my portfolio can be entirely explained by the underlying asset allocation. (more…)

A Look at a Sample Piotroski Portfolio

31 May 2015 by Jim

 

I’ve been trying to take a look at the big picture with my portfolio, so I decided to compare my portfolio’s overall performance since January 2014 until May 2015 to broad categories like US stocks, World stocks, and a balanced Vanguard fund with 60% stocks and 40% bonds. In 2014, I did not yet use the Trending Value methodology for all my stocks. The main focus of my portfolio has been, since the very beginning, stocks with high Piotroski values (7 and higher initially, 6 and higher now). (more…)

Investing can – and should – be simple!

15 May 2015 by Jim

I am into reading and learning about investing, and obviously you, my reader, is to, otherwise you wouldn’t have found this blog. And while it is fun to talk about how different investing strategies do, and what the ‘best one’ out there is, it is important to not loose sight of the basics. We tend to get caught up in minor details. Of course, when people talk about money, most want to get the highest possible return.

But peace of mind is also worth a lot.

After all, for many people, more money is the same as peace of mind, because it means they don’t need to worry about losing a job, paying their bills or defaulting on their loans. (more…)

Strategy Test 2015 – 2: January 30

31 January 2015 by Jim

It’s been a month since I started testing a few different portfolio strategies as explained in this post. Here’s an update on the results so far.

January Chart

 

As you can see, overall January has been a very positive month. Compared to the Dow Jones and the DAX, you can see that while performance has not been quite as good as the DAX, it’s been a lot better than the DJI. However, the DAX is a pure stock index and the portfolios tested are not, except for the Trending Value portfolio of course.

DJI and DAX in January 2015

  (more…)

October 2014 Portfolio Performance: -1.4%

01 November 2014 by Jim

In order to bring some regular actual reporting to the site, I will publish a performance update once a month, since that is the frequency in which I check my portfolio anyway.

As a little reminder, the last change made to the portfolio was shifting 30% of it into bonds, both long-term and short-term, and gold, as a hedge against crises. It turned out be pretty wonderful timing because right after that, the German DAX lost 10% in a week. It has regained some of the loss in the meantime, but it’s not as good as my portfolio. Have a look at the graph yourself. (more…)

A 30% Stabilising Slice in My Piotroski Portfolio

05 October 2014 by Jim

The last change I made to my portfolio last month was adding a 30% piece invested as a stabilising mechanism to weather difficult periods, crises and crashes. Until now I’ve been fortunate enough to never experience a real crash, mainly because I’ve only been investing in stocks since the beginning of 2013, but that’s the point: You need to prepare for the worst when you have the means of doing so, not when it’s too late. Because crashes will happen. And that’s fine by me.

So what is a stabilising piece, in my case? It’s an investment in long-term bonds, short-term bonds and gold. All three of those tend to not move the same way that stocks do, but rather in opposite direction. Gold is especially strong in crises, and bonds do not lose their value in crashes like stocks do because they are not stakes in a company but loans that have to be paid back no matter what happens. (more…)