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5 points about investment
ECONOMY - 06/09/2018

1. The key to successful investing is having everyone agree with you — LATER. The most popular investment of the day is rarely the best investment. If you want to know what’s popular, look no further than the front page of your favored business journal… Or just tune in at your next cocktail party.
At Grant’s, we seek profits where no one else is looking. We’re happy to wait for the consensus to come to us.
We’ve been contrarian since day one. In our minds, there’s no better lens through which to view the market.

 


2. You aren’t good with money. Because humans aren’t good with money. We buy high and sell low because it’s what comes naturally. It’s difficult to control emotions. It’s more difficult when money is involved.
But with detailed security analysis and an expert understanding of market cycles, you can minimize emotions when it comes to your portfolio.

 


3. Everything about investing is cyclical… prices, valuations, enthusiasms. And this will never change. The greatest investors develop a sense of when markets have reached euphoric levels. And of when fear is crippling reason.
Where do you think we stand on that scale today?

 


4. You can’t predict the future. Nor can the guy who claims he can.
You can, however, see how the crowd is handicapping the future. Observing the odds, you can make better choices.
You can recognize the rhythms of market cycles (see lesson 3). And with enough practice, you can profit from those cycles – or at least avoid disaster. As when we warned Grant’s readers in our September 8, 2006 issue about a bubble in subprime mortgage debt – 11 months before the crisis began. And three years later, when we advised going long bank stocks before they rallied 250%.

 

 
5. Every good idea gets driven into the ground like a tomato stake. Exchange Traded Funds (ETFs) were a great idea. They allowed investors diversified exposure to a number of markets for minimal fees.
Today, ETFs account for more than 23% of all U.S. trading volume with a total market value over $3 trillion. And the ETF market is forecasted to hit $25 trillion globally by 2025.
Yes, ETFs allow investors to diversify into lots of markets for a little bit of money. But ETFs allocate money without consideration of value.
And what happens when everyone rushes for the exits?

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