10 from Buffett

Michael Brush over at MSNBC has a nice short article containing 10 investing basics from Warren Buffett. Similar to Bogle's tips, they are eminently simple, logical, and achievable for any investor (save #8 to some degree. Buffett's "big, concentrated" position and yours are going to be very different. Although the concept still applies.)

Trust in American business, buy cheap, and hold forever - that's why this is a great time to invest in the entire stock market through index funds.

Six Lessons for Investors

John Bogle has a great opinion piece in today's WSJ about six lessons for investors.

Fairly simple, straightforward, and logical - what good investing is all about.

Could 2009 Be Better Than You Think?

Five reasons from Alan Murray in the WSJ why it might very well be.

The Lost Decade

An interesting article in the Wall Street Journal about what they call a Lost Decade in the US stock market. For the past nine years, the S&P 500 has returned a paltry 1.3% per year when adjusted for inflation, far below the historical average. It's a scary article, but there are a few positives in there. The optimistic outlook says that we are nearing the tail end of the bust decade, and that there are reasons to believe that the market will rebound.

Of course the pessimistic outlook is decidedly worse...

Investing: Simple But Not Easy

A nice piece by Larry Swedroe via AllFinancialMatters. Swedroe talks about the necessity of bear markets - when market prices are falling significantly. It's interesting from my personal standpoint - I am a complete newbie when it comes to investing. I've been reading up on a lot over the last three months, but I have yet to actually commit to anything. I have $500 in my IRA; I plan on getting that at or close to $2000 by month's end, at which point I will finally decide upon an investment vehicle for that money.

But there are several key points in Swedroe's article. It talks about trying to time the market (and why it's a loser's game). Wise investing is about establishing a plan and being patient and disciplined. I'm working on the plan, I'm infinitely patient, and I'm getting better with the discipline. Also Swedroe points out that a bear market is actually a good time for new investors - stocks on the cheap! So despite the plummeting interest rates, this could be offset by an opportunity to let me start my portfolio with good value for my investment.

Asset Management: A Special Report by The Economist

There is a great special report in The Economist about asset management. It talks a lot about the questionable value of high-expense funds and their managers versus passive investing. It's a fairly lengthy report but quite interesting. I recommend it for anyone, especially new investors like myself.

Money as Debt

What is money? Where does it come from? The government prints it, right? Wrong - the government prints physical currency, but nearly all the money in existence is created by banks, quite literally out of nothing. In this excellent 47-minute animated video by Paul Grignon, our monetary system is explored in depth. This movie will completely change your views of money. All money in circulation is essentially debt, and with this debt accruing interest beyond the total amount of money in circulation, it is necessary to create more money (debt) to pay off this ever-increasing debt. It is a vicious, exponential curve. Our system is fundamentally flawed. Take some time to check out this video; it is truly eye-opening.

A Buffett Buffet

Via Get Rich Slowly, Dang over at Underground Value transcribed a recent address of Warren Buffett to biz school students. Great stuff in there. It's fairly lengthy, but packed with witty lines and some sound advice.

The Quotable Buffett

A great guest post over at fivecentnickel.com containing some great quotes from Warren Buffett. Check it out.

Should Saving Be a National Priority?

My good friend R.W. Buffett directed me to an article by Robert Shiller, Professor of Economics at Yale and Chief Economist at MacroMarkets LLC, in which he argues for an automatic national savings plan. It's a short read, and Shiller makes a couple excellent points.

We as a nation are obsessed with wealth, but all too often from a spectator's point of view. We see the rich and famous with their decadent lifestyles, but we think to ourselves that this isn't attainable outside of being a famous musician or movie star, or being a hedge fund manager or winning the lottery. People love money and dream about what they would do with all that wealth, but they do not, for the most part, spend time thinking about how to actually acquire it. It is truly amazing what the effect of years of careful, regular savings and investing can do for one's net worth, but for a disturbing majority of people, this is simply something they do not think about. Or, if they do, it is only in the abstract. Why? Several possible excuses, all of which I've used:

"I don't make enough to save."
"I'm young; I don't have to worry about retirement."
"I don't understand IRAs, stocks, bonds, or mutual funds. I'm not smart enough to do it right."
Out of sight, out of mind - In their twenties, most people are worried about having fun and getting laid, not saving for the future.

And this seems to be a universal problem. The idea of an automatic savings plan fascinates me. Does it smack a bit of paternalism? To me, yes, but Shiller says it should be automatic but not compulsory. It would be easy for one to withdraw his money and spend it in whatever way he chooses. I think this is a great idea. Something has to be done on a national level. It requires education and reform on a tremendous scale. It requires changing the fundamental way in which most people go about their daily lives. It is the responsibility of good government to ensure its populace is economically viable. A nation of savers would, it seems to me, be far better off than a nation that outspends its ability to pay, and creates an increasingly unsustainable economic house of cards.

Read Shiller's article.

(Note: All my economic theory is based on about a week of intense internet research, so take it with a grain of salt.)