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Clean swearing bleeped out show is here.
Lesegisha once again showed us the error of our ways. In a last-minute attempt, he managed to save the Listener Love Index from pure obliteration. Here’s his argument:
- Although it’s been down 5% on average and around 10% lately, it’s still a good example of Diversification is a way to manage risk when we invest. It means we spread our financial interests across a number of investments. We can diversify by asset class, by having an emergency fund, share investments and property. We can diversify within an asset class, for example by investing in more than one company or an ETF that offers broad-market exposure. More considering how far down Pallinghurst and Steinhoff have been.
- Shares like Kumba that are up by really healthy margins are a good testament that there are also some good picks, which easily could’ve been missed.
- My main qualm (and lesson) is that we are killing it after just one year. Typically a market cycle lasts about seven years, so it makes sense that over a one-year period a In the world of finance, a "portfolio" is a term to describe all the assets you own. It includes shares, cash, bonds, physical property, your retirement savings, your tax-free savings and any other financial instruments you might hold. It excludes insurance products like life insurance. Your overall portfolio can be made up of a number of portfolios held at different More is underperforming.
It may seem like a trivial point but here’s the magic in it.
- The law of probability and averages says that the method we used will underperform over half the time and then overperform the other half, giving us an average return over the market cycle.
- I concede there’s no telling where in the cycle we entered, so it could get worse before it gets better or it really could just go bad. Equally so it can shoot the lights out.
- The most important variable then becomes time. The Love Index shows that by our nature we are impatient with our stock investments if we can ditch them after a year (arguably most of us had given up months ago lol), while we can put up with a bad pension fund or retirement annuity to retirement.
“I think we measured a long-distance run using a 100m stopwatch. I would’ve loved to see how the An index is a tool we can use to measure movement over time. In the stock market, we use indices to track the performance of a selection of listed companies. This could include all the companies listed on the market, or all the companies in a certain sector. In inflation, we use an index to track the price of certain More performs over a longer period (minimum 5-7 years) and I probably will be tracking it on the side. I’m almost certain the dogs in the portfolio won’t recover but a lot of the good-ish companies will outperform the market, especially if When a listed company shares profits with its shareholders, the cash amount paid to the shareholder account is called a dividend. It's usually expressed as cents per share or, in the case of ETFs, cents per unit. The more shares or ETF units you have, the more dividends you receive. These posts discuss dividends in more detail: OUTstanding money: Dividends More are factored.”
Shortly after recording, Rudabager also made a plea in favour of our unloved index, “I think the love index was perfect. It was made up of votes from motivated investors who might imagine they have some insights. It was still a mess. That’s a much more valuable lesson than it crushing the STX40 and a bunch of people deciding to put all their money on it.”
As a result we now have two competing indices. It’s been a year since we made the Love Index, so it’s due a rebalance. If we get 17 votes to remove a company, it goes. 17 votes for a new company gets it in.
The Zack One Lap Index
In this episode, Zack Bezuidenhoudt compiles an index of beauty. I use the opportunity to ask almost every index question I’ve had for a year. It’s a wonderful time.