Author Archives: petewargent

Why you need a system Having a system is important because it guides you to follow successful habits, until eventually, you make successful decisions intuitively. Too often people start out in business or investing without systems, and this leaves them exposed to mistakes and errors. There’s an old rule of engineering that says if somethingContinue reading “Why you should adopt systematic investing”

Nothing new under the sun Fads will always come and go in markets, especially during bull markets. The problem with many such strategies is that they only work when the market is going up, but then all hell breaks loose when the market crashes. ‘Only when the tide is going out do we found outContinue reading “Applying our 8 timeless principles”

It takes all sorts When it comes to investing the dominant line of thinking seems to be that we’re all sensible and coolly rational people. And yet, we should know that when it comes to financial decisions this is not the case, and it could be one of the most damaging beliefs in investing. WeContinue reading “Personality goes a long way”

Broken glass When I was growing up we were obsessed with backyard cricket, which was a bit hairy because the back of our house had a door with a very large glass window pane. Well, you can guess what happened. I’d have liked to explain to my old man that if there’d been lots ofContinue reading “The benefits of diversification”

Market cycles Stocks don’t always go up, they continue to move in cycles, in turn becoming expensive and then cheap. New ideas gain currency driving markets higher on the promise of future riches, until eventually the products and companies in question fail to deliver, whereupon valuations fall back to earth (often faster than they wentContinue reading “Reversion to the mean”

The lifespan of companies When you look back at lists of the top companies from 20, 30, or 40 years ago, it’s nearly always remarkable how few of them are still at the top of the tree (or even around at all!) today. But where do they all go? Well, some get taken over byContinue reading “Understanding the risk hierarchy”

Don’t be average… If someone told you to cross a river because it’s 4-feet deep ‘on average’ you’d be justifiably upset if it turned out to be 8-feet deep in the middle with strong cross-currents. It’s a bit the same when it comes to so-termed ‘average returns’ from investments. It’s often said that you mightContinue reading “Sequence of returns: risks and opportunities”

Nobody knows anything Although we like to weave convenient narratives to explain history, the belief that life is linear and predictable can be a dangerous fallacy. In real time, the world is random and unpredictable, and heavily impacted by rare and totally unpredictable outlier outcomes, known as ‘Black Swan’ events. The dirty little secret ofContinue reading “Time in the market, or timing the market?”

The magical benefits of rebalancing Suppose one of your investments shoots 40% higher. What are the chances of it doing so again soon? Not impossible, of course! But also unlikely. Too often investors experience exciting results, only to undo all the good work by giving back most or all of their paper profits. As BenoitContinue reading “The magic of rebalancing”