Weekend Reading – Liquidity vs TER: Vanguard On Real Cost Of ETF Ownership
Weekend Reading is a collection of Investment Research and Lifestyle topics from all corners of the Web.We source the highest quality insights from Wall Street and Main Street that you may apply to your investment process. Unlike the rest of Bankeronwheels.com, this series is provided without additional guidance. As usual, everything is to be used at your own risk. Below is the type of content we shortlist.
Invest Wisely section is dedicated to research on how to invest for the Long Run using Passive Investment Strategies. Read Topics related to (i) Portfolio Construction and Asset Allocation (ii) Acting wisely by avoiding behavioural traps and also (iii) publications that help understand how financial markets work.
Active Investing section relates to improving your knowledge about active investing. If you decide to sin, then sin only a little. Given ample evidence, combined active bets should be ideally a relatively small fraction of your portfolio. This section also includes Sustainable Investing. You can invest in a Socially Responsible way, but there are many ESG traps. Learn how to invest sustainably, and what it means for expected returns, with our definitive guide to sustainable investing.
Personal Finance section is dedicated to UK and European Products. It can also touch on other European jurisdictions outside the Euro-zone.
- Recommeded Reading
- Youtube (Required watch time)
- Podcast (Listening Time)
- Academic Research - May require intermediate/advanced knowledge
- Noteworthy Twitter Thread
I used to think that if there was reincarnation, I wanted to come back as the President or the pope or as a 400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody.
INVEST WISELY
CONSTRUCT YOUR PORTFOLIO
Live and Let Buy: Which Bonds For Your Objectives? (Bankeronwheels.com)
Whether you are investing for the Short or Long Term, Bonds are a key component in a portfolio. This post, part 2 of the ultimate guide to bond index investing, spotlights the bond categories that will be explored in later issues. There is also some great material on bonds you may want to avoid, to accomplish your goals. There are seven big categories of Bond funds that you may use for portfolio construction. Read which ones are for you.
- Liquidity cost vs. TER - Real cost of ETF ownership over time (Vanguard)
- Should I Hedge With Non-Traditional Investments? (Morningstar)
- Gold prices - why didn't they move over the past 2 years? (The Economist, Paywall)
- How well do commodities hedge against UK inflation? (Monevator)
- Unpacking the risk/reward trade-offs of new indexes (Morningstar)
UNDERSTAND FINANCIAL MARKETS
- Planet Boglehead: Vanguard Struggles to Win Over the World (Bloomberg, Paywall)
- Investor Resilience or In Denial: A Look Back at the First Half of 2023 (Aswath Damodaran - 24 min)
- Deciphering structured products (Rational Reminder - 2 hr )
- The stock market’s up big this year — but not because of earnings growth (Axios)
- Bond managers from Capital Group and M&G answer the big question on everyone's minds: when are rate hikes going to stop? (Morningstar)
- Here's How You'll Know The Next US Bull Run Has Begun (Morningstar)
Updated equity risk premiums & country premiums (Aswath Damodaran)
From Aswath: “Equity risk premiums (ERP) represent the price of risk in the equity market, rising as investors perceive more risk, and falling when they see less. They are ingredients that you need to estimate hurdle rates for projects, if you are a business, and discount rates for investors, when valuing companies. I update the ERP for the S&P 500 every month on my webpage (damodaran.com), and for countries twice every year. My mid-year (July 1, 2023) update of equity risk premiums is now available, and the world, as I see it from an equity risk perspective, is in the attached picture. You are welcome to use these estimates in your analyses and valuations, and if you do, there is no need to seek my permission. Use the numbers sensibly, take ownership of your analysis and may the force be with you!”
Read more on Aswath Damodaran
HOW TO INVEST
Harry Markowitz, Nobel-Winning Pioneer of Modern Portfolio Theory, Dies at 95
You may not know, but Harry Markowitz, a Nobel Prize-winning economist, helped shape Index Investing as you know it by showing that diversification could reduce investment risk while maximizing returns. He recently passed away, aged 95. Robin Wigglesworth has written an excellent book about the Indexing Revolution, including how Markowitz contributed to it. We highly recommend it if you haven’t read it already.
Active Investing
FACTOR investing
A Banker's Safari: Navigating the Zoo Of Factors (Bankeronwheels.com)
Craving an edge with more diversification and potential for higher-than-average returns?Berkin and Swedroe’s “Your Complete Guide to Factor-Based Investing” is a great place to start. This book navigates you through the ‘zoo’ of factors, retaining only the most pertinent and investable factors influencing returns, including the ones that accounted for most of Warren Buffett’s outperformance. But beware, it’s not all smooth sailing. Risks and costs lurk around the corner, demanding knowledge and patience.
Factor Outperformance vs.Tracking Error (Robeco)
Great animated chart with Factor Outperformance vs. Tracking Error since the 1960s for the different factors.
discretionary investing
We’re in the midst of an AI mania of sorts. In public markets, investors are placing bets on the companies perceived as being the winners of this new wave of computing. Companies that aren’t even in “tech” are touting their AI bonafides. And of course, in private markets, every venture capitalist suddenly seems to be pivoting to AI in some way or another. But who will actually win?
ALTERNATIVE ASSET CLASSES
WALL STREET
SUSTAINABLE investing
crypto
BAD BETS
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Spread the Golden Retriever Wisdom Across Europe & the UK 😎
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PERSONAL FINANCE
Wealth Management
What’s it like to be in the top 1%?
From FireVLondon: “What’s it like to be in the top 1%? According to the statistics, most of the readers of my blog are among the highest earning and/or richest people in the UK. I bet however that not many of you feel that way. Let’s start with income. To be in the top 1% of earnings in the UK in 2019 required pre-tax earnings of at least £134k. To be in the top 10%, you need to earn (individually) about £54k. By 2023, inflation has probably increased all these numbers by at least 10%, to say £150k and £60k.”
Read more on Fire V London
Early Retirement
Fat FIRE: The Comprehensive Guide to a Luxurious Early Retirement
Over the past few years, more and more people are looking to achieve financial independence and retire early. Among the many different ways to achieve FIRE, one stands above the rest—Fat FIRE. Fat FIRE is an early retirement strategy that allows you to live life on your own terms. It’s much more than just escaping the rat race and leaving the corporate world behind—it’s about achieving a level of financial independence that gives you the retirement you’ve always dreamed of. But what exactly does Fat FIRE entail? What are its advantages and disadvantages? And what does it take to achieve?
Read more on Of Dollars and Data
FINANCIAL PRODUCTS
COST OF LIVING
OUR Community
Question of the week
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DESIGN YOUR LIFESTYLE
Personal Development
Computer and video game legend John Romero has designed and published more than 130 games since his first sale at the age of 16. A teenage programming prodigy, his major achievements include co-inventing a series of revolutionary computer games—DOOM, Quake, Wolfenstein 3-D, and Commander Keen—that launched the industry’s most popular genre, the first-person shooter. The memoir DOOM GUY: Life in First Person is his first book..
Health & Wellness
CAREERS
Mapping Working Hours & Salary Across The OECD countries
At the top is Mexico, where the average worker clocks over 2,000 hours per year. This reflects the country’s labor dynamics, which typically involves a six-day workweek. For context, 2,128 hours is equal to 266 eight-hour workdays. The only other country to surpass 2,000 annual hours worked per worker is Costa Rica, which frequently tops the World Economic Forum’s Happy Planet Index (HPI). The HPI is a measure of wellbeing, life expectancy, and ecological footprint. Looking at the other end of the list, the two countries that work the fewest hours are Germany and Denmark. This is reflective of the strong labor laws in these countries as well as their emphasis on work-life balance.
More on PBS
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As of 29/03/2024, Interactive Brokers offers rates up to 4.738% (GBP), 3.445% (EUR) and 4.83% (USD) on cash.
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As of 29/03/2024, Interactive Brokers offers rates up to 4.738% (GBP), 3.445% (EUR) and 4.83% (USD) on cash.
TECH AND SCIENCE
Travel
From Bankeronwheels.com
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Banker’s Paradise: Two Easy Ways To Fool Investors
Slashing FX costs! In which currency should I buy ETFs?
Weekend Reading – Global Shocks: How Do Stocks Perform?
Trading 212 Review: Pros & Cons
The Reason Why Sustainable Investing Will Underperform
Cash Is Not Enough: Why Hold Bond ETFs Despite Price Rollercoasters.
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