The first week in the new office was certainly one to remember. Our favourite asset took its biggest hit in 30 years. The stock market went into a frenzy of ups and downs. And the price of sandwiches rose 140%.
That’s right, Port Phillip Publishing has moved up in the world. No wonder we feel out of place. There’s a big difference between the syringes and vomit of St Kilda and the $9 schooners of Albert Park. People here don’t even know what a pint is. If you order ‘prawns’ in Albert Park, you get two. In Queensland, ‘prawns’ come in a bucket.
The good news is there’s enough room in the new office to play carpet bowls and kick a footy. The dartboard is back and the white walls are practically made for doodling on with orange chalk. The new remote controlled helicopter delivers messages to the mezzanine level above. Who needs email?
Best of all, we’re back together again with long lost friends from our sister company Portner Press. They’ll solve any of your employment law and OHS needs here. Our customer services team is now just a few stairways away too.
But what’s this? The Australian stock market is down almost 4% from its March 11 high. Oh well, it could be up 4% next week. That’s what it’s been doing these last few years after all. Up and down. All that effort to end up going nowhere. We were bouncing around the 5000 mark in the ASX200 in 2006 for crying out loud. It must really be bugging the investors who punt on capital gains in blue chips.
Pointing out that stock markets are just going sideways misses one big factor — volatility. And volatility is dangerous. It makes you do silly things like buy when the market is at its most euphoric or sell when it just crashed.
Anyone will tell you to do the opposite. But actually hitting the sell button when the market is peaking at new highs is very difficult. And buying when the market is tumbling feels like attempting to catch a falling knife.
We’ve had plenty of wild ups and downs since 2006. Most investors would’ve lost money on those swings by making the two mistakes we just mentioned. But it’s not only about the financial side.
Just think about what the crash of 2008 did to your health, let alone your bank balance. And your personal relationships must’ve frayed alongside your wealth.
The point is, there’s more to life than the bipolar stock market. So how do you optimise your investments in a way that benefits the rest of your life? How do you stop the ups and downs of the stock market from tying knots in your stomach? How do you make trips to the golf course about driving a golf buggy, not checking your phone for stock market news?
There are bundle of ways you can invest to improve your own internal wellbeing. Moving your office to Albert Park, for example. Or why not try travel through time to invest in the vintages of the future? Going into the red on an investment has never been so good.
You might prefer stamp collecting. Or buying antique furniture and actually using it. Heck, even pens can be a profitable investment these days. Imagine using a $2000 titanium tipped fountain pen to sign the bill at a restaurant.
Now that the world wide web has cut out just about every middleman for many investments, and you can inform yourself for free, why not take the plunge? But the point is, profit aside, investing can actually be about benefitting your wellbeing instead of turning you into a nervous wreck.
What’s surprising is how these enjoyable investments can outperform the nerve wracking ones in terms of monetary gains too. Fine wine, for example, is trouncing the stock market’s returns.
But with far fewer nerve-wracking crashes, booms and crises than your shares have been through. Not that investing in wine doesn’t have its risks. You might have to drink some bottles if they don’t generate enough of a profit.
But who really invests in wine? Well, because wine is a consumption item, it turns out Port Phillip Publishing editors can invest without breaching our strict company policies.
So we might join the other Money for Life Letter subscribers on the ‘en Primeur’ campaign. Famed investor Jeremy Grantham’s company GMO invests in timber because he became interested in trees after a holiday touring South American jungles. That and the impressive returns, of course.
Still, investing in tangibles isn’t everyone’s cup of tea. (You could also invest in rare china.) So how do you ensure you can sleep at night while your stock market investments fluctuate wildly? That’s the question we asked ourselves for this month’s edition of The Money for Life Letter. The answer, it turns out, involves making more money.
Believe it or not, it’s actually possible to lower your risk and increase your profits at the same time. That’s supposed to be impossible, according to financial theory. But thanks to a well documented anomaly in the world of finance, so-called boring stocks do better.
Luckily, nobody really knows why this is the case. So we could leave discussions of idiosyncratic risk out of the monthly issue and focus on just how to achieve lower risk and higher returns.
Another way you can opt out of the stock market’s misbehaviour is to focus on income instead of capital gains. The current Money for Life Letter portfolio features a bundle of four dividend paying stocks.
Individually, they’re up, down and all over the place too. But taken as a group they rarely budge more than 2% from their entry prices. That’s by design, although we can’t reveal how they work together. Meanwhile, the dividend cheques have been flowing.
But does all this really work? Will you be happier, sleep peacefully and enjoy life more if you change the way you invest?
Well, all these investment ideas left your editor cool, calm and collected while markets tumbled and rallied this week. The Money for Life Letter portfolio, and your editor’s nerves, barely budged while the ASX200 fell 80 points not once but twice.
Moving office was dramatic enough. Why add to the drama by investing in stocks that are volatile and end up underperforming? Instead, find investments that will benefit your wellbeing and your bank balance.
The Daily Reckoning Weekend Edition
ALSO THIS WEEK in The Daily Reckoning Australia…
The Brains of Barbarians
By Dan Denning
The deflationists continue to run rampant with glee as stocks, gold, and commodities in general get hammered. Is this the market giving a big ‘thumbs down’ to quantitative easing (QE)? Have central banks started to lose the final battle in their war to reflate asset prices? Or is this just the big dump before the insiders buy at the bottom and start the next pump?
This Gold Bug Ain’t for Turning!
By Bill Bonner
At the time the last bull market in gold ended, everything stopped in its tracks and turned around. Stocks had been going down for at least 16 years; they suddenly started going up. Bonds had been going down too, ever since the end of WWII; they too started moving in the opposite direction…Is there any major turnaround now that would justify or at least signify an historic turn in the price of gold?
Don’t Buy Gold (Yet)
By Greg Guenther
The gold market was booming. So naturally, people headed in its direction. Investors, traders, hedge funds and your crazy coworker bought gold. People wanted to own it because of its performance. Now they are leaving. And they won’t be rushing back to buy anytime soon.
Where Currencies Fear to Tread
By Joel Bowman
Whoa! Did you see that? The wonder currency of bitbugs and anarchist types crashed big time last week…all the way back to a (roughly) 400% gain YTD! Woe to those ne’er-do-wells and techno-geeks. ¡Pobrecitos! As you might recall from our scribbles, the price of a single unit of the digital currency had risen meteorically in recent times