Investing isn’t about mastering the markets; it’s about mastering yourself.

That was the central tenet of Benjamin Graham’s “The Intelligent Investor”—and, in large part, why Warren Buffett has called it “the best book about investing ever written.”

Graham’s emphasis on self-control is also why, although first published in 1949, the book is still relevant today. In fact, it’s more relevant than ever.

Graham wasn’t only one of the best investors of all time; he may have been the wisest. His intellectual brilliance, six decades of investing and study of history gave him a profound understanding of human nature.

As he wrote: “The investor’s chief problem—and even his worst enemy—is likely to be himself.”

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This article was originally published in The Wall Street Journal.

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Index funds have made investing simple—but not easy.

These portfolios that seek to match, rather than beat, a market’s returns usually charge extremely low fees and generate low tax bills. If you buy a handful of index funds, sit on them for decades and never do another thing, you’re likely to outperform nearly everyone who tries to beat the market by trading—including most professionals.

But what’s the fun in that? Can you endure a lifetime of barbecues and cocktail parties where other people brag about their winning trades and all you can do is mutter, “Umm, I own index funds and I haven’t made a trade in a decade”?

No wonder index funds can become tempting to trade. 

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The Wall Street Journal, Aug. 23, 2024

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Stop trying to make it make sense.

Just about every volatility storm in the markets quickly morphs into a baloney blizzard, as Wall Street’s market strategists and a swarm of online pundits pretend to explain what just happened and concoct predictions of what will happen next.

It’s time to sharpen your critical-thinking skills. To stay the course as a long-term investor amid this short-term turbulence, you will need them.

On Monday, Aug. 5, the Japanese stock market had its worst day since 1987, crumbling 12.4%, and U.S. stocks slumped 3%. Wall Street’s fear gauge, the VIX index of volatility, shot up more than 50% to its highest level since the dark pandemic days of 2020. The next day, Japan bounced up 10%, while the S&P 500 gained 1% and the VIX fell 28%. By week’s end stocks stood not far below where they did before the wild ride.

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On Wall Street, every bad idea starts out as a good idea. And, given enough time, Wall Street will turn every bad idea into a terrible idea.

Even one of the world’s most celebrated investors wasn’t able to buck that cold, hard truth. This week, Bill Ackman, the hedge-fund billionaire who has 1.4 million followers on X, had to pull the plug on his new fund before it could launch its initial public offering.

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In spring 2008, Paul Rosenau, a construction supervisor and heavy-equipment operator in Waseca, Minn., bought a Powerball ticket—and hit a $59.6 million after-tax jackpot.

Rosenau, a devout Lutheran and the son of a pastor, recalls with a tremor in his voice how he and his wife, Sue Rosenau, felt when they woke up the next morning.

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It’s a stock picker’s market. So why aren’t more stock pickers doing better?

In theory, active fund managers, who try to pick the best investments and avoid the worst, should excel when some stocks zig as others zag and when the gap between the winners and losers is wide.

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Further reading

What your exchange-traded fund owns is important. Who else owns your ETF might be even more important.

That’s because a fund’s returns often don’t depend merely on the behavior of the investments it buys, but also on the behavior of the investors who buy the fund.

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Further reading

If your financial advisers haven’t yet tried to sell you any “alternative” investments, they might soon. Flogging these assets that aren’t listed on a stock exchange—bundles of real estate, buyout deals, private debt and so on—is one of Wall Street’s biggest obsessions.

Getting in is easier than ever. But I doubt most buyers understand how hard getting out can be.

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Further reading

This week, the Dow Jones Industrial Average, born on May 26, 1896, turned 128 years old. Let’s pour the Dow a drink from the fountain of youth and see what happens.

I’ll give you a hint. The lesson here isn’t only about markets, but also about marketing—in particular, what’s called backtesting, a statistical dirty trick that’s central to Wall Street’s marketing playbook.

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Further reading

Electric-utility stocks have long been considered the ultimate in stodgy, slow-but-steady investments—appealing strongly to people who value income and long-term safety above growth and quick gains.

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Further reading