In 2013 I started a new blog to put my ideas in order, document my thoughts and research subjects that interest me. My goal with Buzzonomics is to arouse your curiosity about all kinds of topics and guide you on your quest to become better investors.
I started my blog with articles about Bernanke, Gold and Bonds.
In my first article online, I argued that when QE was initiated, Bernanke did not foresee the consequences. His only consideration was to give the market a drug injection to keep it alive. In the process he created a huge dichotomy in the economy. The rich who owned stocks and works of art got richer while the poor who depend on jobs are relatively not better off. Indeed, the stock market has set all time highs, works of art are selling at insane prices while true unemployment is still well above long-term trends. A bubble is underway, the bubble of the rich for the rich…
I am not a gold bug, however what happened to Gold in 2013 will be remembered in history. In my article “Gold a heart breaking lover” I presented different theories to explain what happened. For the first time in 13 years, gold had a negative return. It might continue downward into 2014 but with the flood of money from central banks, a little bit of Gold in the portfolio would be a good diversifier.
I am a big admirer of Buffett and his investment philosophy. I believe the only way to successfully invest is by having a long term focus, being patient and buying when assets are cheap. Buying companies with a moat at a cheap price is an effective way to reduce investment risk. In his letter “The superinvestors of Graham and Doddsville” that I posted here, Buffett talks about other value investors who were able to beat the market continuously by buying different assets than his. Buffett was able to have returns of 60% before his partnership and then 20%/year for 30 years. What he did is absolutely astonishing. Just try to compound $1000 at 20% for 30 years and you’ll understand why he is the richest man on the planet. And remember, he is not the only one! Other value investors have done it too.
To be a high-quality investor you need more than hard work, you need to have discipline and a sound investment philosophy. You need to have a long term optimistic approach and ignore the pessimistic short-term news pundits. I regularly post articles from “Buffet like” people in the “On value investing” and “Worthwhile newsletter” sections. It is by reading their letters that I developed my own investment philosophy and hopefully you will too.
Here is an article “Jokes, Facts and Words of Wisdom from Warren Buffett” that is always fun to read.
My last 2013 article was The Bitcoin Buzz. I concluded that Bitcoin was a way to play the lottery and that in the long-term it would fade away.
Going into 2014, I am laying some basic principles for myself:
1- Regularly make time for writing.
2- Try to be as unbiased as possible and do not try to predict the unpredictable.
3- And finally, for my writings, follow Allen Ginsberg’s words:
“Concentrate on what you want to say to yourself and your friends. Follow your inner moonlight; don’t hide the madness. You say what you want to say when you don’t care who’s listening.”
Thank you for reading and happy New Year!