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Simple But Not Easy: A Practitioner's Guide to the Art of Investing
Described by the author as "a slightly autobiographical and heavily biased book about investing", Simple But Not Easy won fans among both professional and private investors alike when first released in 2007. The theme of the book is that investment is simpler than non-professionals think it is, in that the rudiments can be expressed in ordinary English and picked up by anybody. It is not a science. But investment is also difficult. People on the outside tend to think that anyone on the inside should be able to do better than the market indices. This is not so. Picking the managers who are likely to do better is a challenge. Richard Oldfield begins with a detailed confession of some of his worst mistakes and what they have taught him. He discusses the different types of investment, why fees matter, and the importance of measuring performance properly. He also outlines what to look for (and what not to look for) in an investment manager, when to fire a manager, and how to be a successful client. A cult classic for its candid confessions and sparkling wit, this extended edition of Simple But Not Easy - featuring a new author's preface and a substantial afterword - remains an indispensable companion for all those interested in the rewarding but enigmatic pursuit of investing.
- GenresFinance
294 pages, Paperback
Published December 14, 2021
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Displaying 1 - 2 of 2 reviews
July 9, 2024
Seig første halvdel, men fant formen i andre halvdel. Lurer på om strukturen er feil, eller om det handler om 1) mine forventninger 2) mine interessefelt eller 3) at jeg ble vant til stilen.
Rundt side 150 skriver han «jeg prøver ikke med denne boken å lære deg å investere, men gi deg et innblikk i hvordan forvaltere jobber». Det var en nyttig setning. Den burde stått på baksiden. Og kanskje forsiden. For det er akkurat dette boka gjør. Og det er ganske interessant. Det meste er kjent for meg fra før, men vinkelen ny, og sånt hjelper også på læringen.
PS: Vitsetegninger er memes for boomers. At du bruker dem i boka di er kun et vitnesbyrd om din tilårskommenhet
Rundt side 150 skriver han «jeg prøver ikke med denne boken å lære deg å investere, men gi deg et innblikk i hvordan forvaltere jobber». Det var en nyttig setning. Den burde stått på baksiden. Og kanskje forsiden. For det er akkurat dette boka gjør. Og det er ganske interessant. Det meste er kjent for meg fra før, men vinkelen ny, og sånt hjelper også på læringen.
PS: Vitsetegninger er memes for boomers. At du bruker dem i boka di er kun et vitnesbyrd om din tilårskommenhet
January 4, 2024
“And what do you do?”
“I am an investment manager”
“How nice. Pause. Slight embarrassment. “I am afraid I do not know anything about investment”.
Always remember, that investment is something to do, rather than to talk about.
Never discount the outside view’s superiorly to the inside view (the City) where all the frenzy and fear becomes self-fulfilling. Remember also the Counter-Presentation Principle that states the ability of investment manager may be inverse to their ability to present. Always try to apply the PAPE rating system; People, Approach, Practice and Environment (Polite Africans Protect Elephants).
• People: Courage of conviction but diversified (more than 1 idea of theme bought).
• Approach: Value or growth, or active (active investors may be good at influencing a company, but not making good investment decisions)
• Practice: Portfolio turnover, chasing the crowd & buffeting (selling a stock out of panic and the buying it back later).
• Environment: Alignment of interests and size of Fund.
You could add in reporting, which should not be full of Marco-economic commentary, and updates on the team. It should at its core, provide financial performance.
Past performance is really no guide to the future. Often managers that outperform in the first 3 years, underperform in the next 3. On average only 22% of fund managers maintain performance over a 6-year period. With this mind, a good rule of thumb is to never buy a trust at a premium. If investors feel they have to index, look at GDP weighted international indices, rather than traditional indices weighted on market capitalisation.
Currency and equity decisions tend not to go well together. Currency trading is ultimately a zero-sum game, whereby if you hold the best currency for 10 years, your real return is 0 because all currencies can do is go up and down in relation to one another. Equities are the opposite. So true as per your Japan Investment Trust investment.
In the period 1985 – 2006, there was a 46% of chance of losing money if investing in the S&P for 1 day, 42% for 1 week, 35% for 1 month, 27% for 1 quarter, 18% for 1 year, 14% for 3 years, and 0% for 10 years.
Private equity does not really outperform as much as figures suggest. If you leveraged your equities portfolio, to the same level of a standard PE portfolio, then you are likely to achieve a 50% return per annum, compared to 15% in PE.
Hedge funds are much the same. Although some funds do generate extraordinary returns at a certain period, when equities rise, hedge funds invariable have to become more invested in equities, which defeats the object of a hedge fund. On average, if the S&P rise 10% most hedge funds will only return 4.2%. Hedge funds also have a habit of overinvesting in doom and gloom, as it is the very fear of the doom and gloom scenario for the standard investment manager that drives them to invest in hedge funds. Short selling HF are even worse. If a Long Fund manager makes a mistake on a share position of 5% that subsequently halves, then the overall exposure is 2.5% in your portfolio. If you are a short seller, and you have to abandon your short, and in the process are obliged to buy the share, you lose money on the position, and then on the share price rising, and you are buying the shares.
Always be wary of the beatification of CEOs and a reverential attitude amongst their staff. If they are referred to as “The chairman, leader” then be wary.
Value managers are naturally sceptics who view positive projections with cynicism. Growth managers are optimists, looking for the best in everything and everyone. Of the two richest men in world, Gates and Buffett, Gates will be remembered, Buffett quickly forgotten.
Active V Passive argument. Many people think this decade will be even more dominated by the passive funds. The issue is however that more markets (S&P 500) are being dominated by fewer stocks, like FANGS. Passive funds do not account of this, and allocate accordingly to market capitalisation, meaning FANG prices are pushed up even more. If FANG performed badly, and people suddenly got nervous and pulled their passive funds, then price pressures would be compounded against FANG stocks. Ultimately, investing is about a return to the mean, and active investment may have its day once again during times of market panic.
“I am an investment manager”
“How nice. Pause. Slight embarrassment. “I am afraid I do not know anything about investment”.
Always remember, that investment is something to do, rather than to talk about.
Never discount the outside view’s superiorly to the inside view (the City) where all the frenzy and fear becomes self-fulfilling. Remember also the Counter-Presentation Principle that states the ability of investment manager may be inverse to their ability to present. Always try to apply the PAPE rating system; People, Approach, Practice and Environment (Polite Africans Protect Elephants).
• People: Courage of conviction but diversified (more than 1 idea of theme bought).
• Approach: Value or growth, or active (active investors may be good at influencing a company, but not making good investment decisions)
• Practice: Portfolio turnover, chasing the crowd & buffeting (selling a stock out of panic and the buying it back later).
• Environment: Alignment of interests and size of Fund.
You could add in reporting, which should not be full of Marco-economic commentary, and updates on the team. It should at its core, provide financial performance.
Past performance is really no guide to the future. Often managers that outperform in the first 3 years, underperform in the next 3. On average only 22% of fund managers maintain performance over a 6-year period. With this mind, a good rule of thumb is to never buy a trust at a premium. If investors feel they have to index, look at GDP weighted international indices, rather than traditional indices weighted on market capitalisation.
Currency and equity decisions tend not to go well together. Currency trading is ultimately a zero-sum game, whereby if you hold the best currency for 10 years, your real return is 0 because all currencies can do is go up and down in relation to one another. Equities are the opposite. So true as per your Japan Investment Trust investment.
In the period 1985 – 2006, there was a 46% of chance of losing money if investing in the S&P for 1 day, 42% for 1 week, 35% for 1 month, 27% for 1 quarter, 18% for 1 year, 14% for 3 years, and 0% for 10 years.
Private equity does not really outperform as much as figures suggest. If you leveraged your equities portfolio, to the same level of a standard PE portfolio, then you are likely to achieve a 50% return per annum, compared to 15% in PE.
Hedge funds are much the same. Although some funds do generate extraordinary returns at a certain period, when equities rise, hedge funds invariable have to become more invested in equities, which defeats the object of a hedge fund. On average, if the S&P rise 10% most hedge funds will only return 4.2%. Hedge funds also have a habit of overinvesting in doom and gloom, as it is the very fear of the doom and gloom scenario for the standard investment manager that drives them to invest in hedge funds. Short selling HF are even worse. If a Long Fund manager makes a mistake on a share position of 5% that subsequently halves, then the overall exposure is 2.5% in your portfolio. If you are a short seller, and you have to abandon your short, and in the process are obliged to buy the share, you lose money on the position, and then on the share price rising, and you are buying the shares.
Always be wary of the beatification of CEOs and a reverential attitude amongst their staff. If they are referred to as “The chairman, leader” then be wary.
Value managers are naturally sceptics who view positive projections with cynicism. Growth managers are optimists, looking for the best in everything and everyone. Of the two richest men in world, Gates and Buffett, Gates will be remembered, Buffett quickly forgotten.
Active V Passive argument. Many people think this decade will be even more dominated by the passive funds. The issue is however that more markets (S&P 500) are being dominated by fewer stocks, like FANGS. Passive funds do not account of this, and allocate accordingly to market capitalisation, meaning FANG prices are pushed up even more. If FANG performed badly, and people suddenly got nervous and pulled their passive funds, then price pressures would be compounded against FANG stocks. Ultimately, investing is about a return to the mean, and active investment may have its day once again during times of market panic.
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