"Go to bed smarter than when you woke up." - Charlie Munger
Any new book by Bill Bernstein is a must read for me
This is an excellent guide that takes a step back and looks at the bigger long term picture of investing and wealth building/protection.
Below is a list of what I've personally learnt so far or has tweaked my interest from reading the first chapter.
- The four deep risks: Inflation, Deflation, Confiscation and Devestation
- Capital managed in the long term (>30 years) should be guided by deep risk.
- Discipline (e.g portfolio re-balancing), cash and courage which act against short term shallow risk, do not mitigate deep risks.
- An example of a deep long term risk: Japanese large caps lost -58.2% from 1990-2013
- Historical studies show gold protects poorly against inflation, in fact performs better in deflationary periods.
- Harry Browne's permanent portfolio is flawed as it equally weighs the probabilties of prosperity (shares), inflation (gold), deflation (long bonds) and 'tight money' ( T-Bills) equally as well as their consequences and costs.
- Deflation less likely historically than inflation which savages bond returns.
- From 1941 to Sept 1981 (an inflationary period) US bonds lost 67.3% of real value (interest reinvested).
- Hence, bonds are an expensive insurance against the relatively unlikely long term outcome of deflation.
Cardamom futures dip on subdued demand.
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