Most of us guys are useless at Christmas shopping. Here's a few tips I've picked up over the years.
Ladies, you might want to share this with the men in your family to avoid getting an undesirable and badly wrapped present this Christmas.
Buying your Christmas presents at a petrol station or dairy on Christmas morning really isn't the done thing - apparently not everyone wants a funnel, box of biscuits or a car care kit. Don't do it.
Get started early, no not on Christmas Eve, yesterday was already too late.
First thing in the morning is the best time to Christmas shop, and I mean first thing, teenagers are still in bed.
It's not the thought that counts, it's how MUCH thought that counts.
Cash is a GREAT present for teenagers - and me.
If you must give gift vouchers make sure they are from a shop the recipient actually shops in and try and avoid those with an expiry date.
Wrapping and cards are important, you and I know it's just paper but for some reason they are important.
Before you start browsing in a shop check that it does gift wrapping and accept the service - wait if necessary. If the shop doesn't do gift wrapping move on to the next. Unless you are an expert present wrapper - Yeah Right!
Even if every present you buy is gift wrapped, buy plenty of wrapping paper and sellotape. You are going to need it because dairy's and petrol stations don't gift wrap and being a bloke you'll probably ignore number 1.
Guys ignore the above at your peril and have a wonderful Christmas.
There are ten time honoured lessons to be learned from the market declines of 2008 and early 2009.
1. Markets aren't efficient
Academics refuse to jettison the efficient market hypothesis, despite evidence of its role in the recent crisis. As the 11th Circuit Court of the United States wrote in a recent opinion, "All bubbles eventually burst, as this one did. The bigger the bubble, the bigger the pop. The bigger the pop, the bigger the losses."
2. Relative performance is a dangerous game
Like the efficient market hypothesis, its offspring the capital asset pricing model also rests on flawed assumptions. It commits fund managers to relative performance rather than absolute performance, which leads them to follow market weightings when picking stocks rather than their own good ideas.
3. The time is never different
Bubbles are identifiable before they burst, and knowledge of the history of bubbles can help preserve capital. Each bubble inflates and bursts in five phases, identified by John Stuart Mill in 1867: Displacement, credit creation, euphoria, financial distress and revulsion.
4. Valuation matters
The principles of value investing tell us to buy when the market is cheap and sell when the market is expensive. This means, however, that we must be prepared to not be fully invested when equity prices are unattractive.
5. Wait for the fat pitch
The average holding period for a stock on the New York Stock Exchange is six months. This myopia creates opportunities for investors who are willing or able to act on a longer time horizon and wait for the "fat pitch" - the time when valuation figures are just right.
6. Sentiment matters
Market sentiment swings like a pendulum from irrational exuberance to despair. It therefore pays to be a contrarian investor. Young, volatile, unprofitable "junk" firms generate the best returns when sentiment is low. Mature, low volatility, profitable "quality" firms produce the best results when sentiment is high.
7. Leverage can't make a bad investment good, but it can make a good investment bad!
Adding leverage onto an investment with small returns doesn't turn it into a good idea. Leverage can limit staying power, and can turn temporary impairment into a permanent impairment of capital. "Financial innovation" is usually just thinly veiled leverage.
8. Over-quantification hides a real risk
Risk is not volatility. Rather, risk is the permanent loss of capital. We would be better off abandoning our obsession with measurement and instead focus on the three main paths to permanent loss of capital: Valuation risk (buying an overvalued asset), business risk (fundamental problems) and financing risk (leverage).
9. Macro matters
Ignoring the top-down view of the markets can be incredibly expensive. The credit crisis showed precisely how a top-down view of the markets can inform and enrich a bottom-up perspective. Investors who understood the impact of the bursting of the bubble avoided financials, while those who focused on the bottom-up saw cheapness, but missed the value trap resulting from the bursting credit bubble.
10. Look for sources of cheap insurance
Insurance is often a neglected asset. Insurance virtually guarantees short-term losses, but also provides a big payout if an event occurs. It is best to avoid purchasing insurance right after an event occurs, because that is when it is most expensive.
Attribution: This article is a synopsis of a white paper by James Montier, a member of the GMO asset allocation team. It is reproduced with permission from Advisor Perspectives. http://www.advisorperspectives.com
Most of us guys are useless at Christmas shopping. Here's a few tips I've picked up over the years.