Investing and rate rises

The recent rate rise has got me thinking a lot of about investing money.

I’m actually quite happy about the latest interest rate rise, specifically because the housing market needed reining in big time. It needs more reining in. I feel sorry for my parents, but all the kids advised them against the purchase of their current house. Hopefully the rise doesn’t cause them to suffer too much. The opposite is true for me, I sat down last year in a bit of a panic about housing affordability and have decided for the short term at least, to manage my money such that interest rate rises become the best thing since sliced bread.

Travis Morien investment FAQ, some of his presentations, and an article about lowering risk in investing. This is the site I have been reading, and it’s wonderfully validating that I have had a lot of the same ideas as experts… (Such as buying good companies in the worst performing sectors on the stock market, buying into index funds around the world…)

There’s an enormous wealth of information and all of it is worthwhile. Morien talks in simple language that makes these sometimes difficult concepts easy to understand. And it’s also not a hypey sales pitch like all the con artists. The fact that he is basically preaching Buffett gives him a huge tick in my eyes.

There’s an article at my work quoting Warren Buffett, the greatest investor in the world today by a country mile, on his basic principles. He’s currently second richest man in the world, and has made all of that just by investing prudently. I quote:

1. “Our favourite holding period is forever.”

2. “Risk comes from not knowing what you’re doing.”

3. “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”

4. “If a business does well, the stock eventually follows.”

5. On gold: “It gets dug out of the ground in Africa, or some place. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”

6. “Time is the friend of the wonderful company, enemy of the mediocre.”

7. “Only when the tide goes out do you discover who’s been swimming naked.” (A great reason to buy stocks in sectors that have been smashed. It exposes the pretenders.)

8. “We simply attempt to be fearful when others are greedy and greedy only when others are fearful.” (Or as someone else said : “if your taxi driver is talking about it, it’s time to get out.”)

9. “It’s better to hang out with people better than you… Pick out associates whose behavious is better than yours and you’ll drift in that direction.”

10.”The smarter the journalists are, the better off society is. For to a degree, people read the press to inform themselves - and the better the teacher, the better the student body.”

Bonus quote:

11. “You pay a high price for a cheery consensus .”