Some Economics with your breakfast

bestyet · 8 May 2018 at 11:30PM

new to investment, daily enjoy listening bbc wakeup to money in the morning before heading to office, also bbc live market.

Occasionally FT Money, Economists from local library which is a bit hard for me to digest.

AnotherJoe · 9 May 2018 at 9:36AM

AimHigh wrote: »

I understand your point but don't think it can hurt to keep on top of current events for both "self improvement" (thanks bowlhead99) and spotting overall trends that are bound to impact your investment and life decisions eventually.

Here's what can happen when you do that.

https://youtu.be/SKXVmwX0-_c

(summary, someone read lots of current stories about the company they had invested in and bailed out far too early, believing the naysayers) . (And just in case it looks like I'm so smart, ive done the same except in reverse, read the stories, invested, got burned.)

Your thesis is, if i am right, by reading about current (and potential future) events you are better informed and will make decisions now that will set you up for the future. OTOH as that short video shows, you could easily read things now that actually are going to mislead you. And its tough to know which are the right ones and you could equally be mislead as put on the right track.

The issue then is, you cant live in a black hole of news and make investment decisions either, so what do you do? I look at whats happening, what trends i see and ignore the day to day noise and Id count even an august journal like the Economist in with that.

I've invested in battery technology because its obvious to me this is a massive coming trend. I invested in solid state memory back in the late 90's because it was obvious to me that digital cameras would replace film. I've now invested in biotech and healthcare because its obvious to me thats with aging populations thats where a lot of money will be made.

I dont need to read the Economist every day to be aware of those. But, just to make a point, here's an article from The Economist from 2003 on digital cameras. Would you invest in Kodak on the basis of that? Or would you invest in their competitors on the basis of that article? Hmmmm hard to say. Maybe both? I note that super clever investor Carl Icahn spent $500m on Kodak shares. Well, maybe he knows whats what, so you should invest on the basis of that snippet? That wouldn't have worked out so well.

The trick answer is of course you have have invested in neither, since both were within a few years utterly eclipsed by camera-enabled smartphones which weren't even a thing then. And without blowing my own trumpet i was investing in the memory that digital cameras used about 5 years before that article was written.

Now to be fair, investing in the "picks and shovels" of digital memory would have been a good strategy to pick back when that article was written. But the article doesn't even mention that. OK its about Kodak so maybe that isn't its rationale but it wouldn't have helped anyone reading the article to even consider that possibility. At best, you'd have ignored the article entirely since investing in any of the companies mentioned would have been a terrible idea.

AimHigh · 9 May 2018 at 1:53PM

Completely appreciate where you're coming from AnotherJoe and not denying that what you're saying is true. I'd be lying if I said that investing in individual shares doesn't appeal to me but if/when I get to that point it'll be on top of a core portfolio of funds etc.

However, as you successfully did with solid state memory (and hopefully battery technology - keep grinding Mr Musk), I'm interested in keeping on top of current events so that I can also get a feel for industries on the rise. And that aside, nothing wrong with improving your ability to understand the impact of current events on the economy in general :beer:

MallyGirl · 9 May 2018 at 3:51PM

bowlhead99 wrote: »

Like a typical lengthy bowlhead99 post, it's best read when you're sitting down with time to get your head around it.

If you subscribe and get it every week you will probably not get through it every single week and then they start to build up. I ended up dropping my subscription as it started to feel like a bit of a chore to make time for them, which is not what you want for something you're reading for self improvement rather than work. Yet if I wasn't going to read them I was thinking of the £15 a month subscription l could be spending on something else.

See if you can get your local library to stock them (if you use one) or your employer to subscribe to stick them in an office somewhere along with whatever other industry press for your type of business, to give you something to do with your lunchtime when the mood takes.

My DH decided to try a very cheap subscription offer for the Economist. It might have been the 12 weeks for £12 one. Months and months later they still keep coming. We aren't paying but they resist all attempts to get them to stop sending !

Plus · 9 May 2018 at 11:28PM

AnotherJoe wrote: »

I dont need to read the Economist every day to be aware of those. But, just to make a point, here's an article from The Economist from 2003 on digital cameras. Would you invest in Kodak on the basis of that? Or would you invest in their competitors on the basis of that article? Hmmmm hard to say. Maybe both? I note that super clever investor Carl Icahn spent $500m on Kodak shares. Well, maybe he knows whats what, so you should invest on the basis of that snippet? That wouldn't have worked out so well.

I think I would argue that the Economist is not an investment magazine, it (despite the print format) is a newspaper. Newspapers tell you about the state of the world. They often tell you what other people think about the state of the world. They don't tell you what to do about it.

People who are selling things (ie fund managers) love to tell you what to do about it - buy their fund obviously, because it'll be great. Sometimes they're worthwhile even if you don't (eg you buy their competitor's fund in the same sector because it's cheaper).

This all feeds into your general model of what's happening in a particular area, and they you can look into investment opportunities. Maybe European shares are cheap (on a macro level) or maybe IzzyWhizzyPharma has a promising new drug (on a micro level). Trustnet or stock screening or the trade press or stock exchange announcements or annual reports are where you find out about those.

The purpose of reading newspapers is to be reasonably well informed, not to tell you what to buy. That's what DYOR is about.

Some Economics with your breakfast

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free