Happy New Year to all of my Substack followers.
Please accept my apologies for allowing my personal finance blog writing to cease in 2023.
The reason?
I spent much of 2023 applying the finishing touches to ‘The Sloth Investor’, a personal finance book that I have been working on for several years. In the latter part of 2023 I teamed up with a publishing company in the UK and they will be helping me to publish the book later this year.
The core aim of the book is to ‘Simplify Investing For All’.
The publication date for ‘The Sloth Investor’ will be June 28th 2024.
I am delighted that the book has already started to appear on several online sites (for pre-order) and my publisher has informed me that the book will be listed via Amazon closer to it’s official publication date.
Endorsements
The concept of ‘investing like a sloth’ has resonated with many people over the last few years, particularly those in the personal finance community. Therefore, I am proud to share that the following personal finance authors have written endorsements for the book.
Future Written Content
Moving forward, here is what you can expect from the Sloth Investor on Substack:
Mid-Month: A personal finance blog post
Final Weekend of the Month: In-depth discussion of content on the Sloth Investor YouTube channel.
Forget Forecasts
Mrs Sloth and I (and our mini-sloths) spent the yuletide period in Frankfurt, Germany, visiting her family. On one chilly, late December afternoon, Mrs Sloth and I visited the city centre to stroll around the shops.
After some early forays into several shops (the Sloth Investor is not much of a shopper) I left Mrs. Sloth to it while I took myself off to a coffee shop and read a copy of the The New York Times International Edition.
While sipping on my flat white, I stumbled upon a fantastic article in the business section by Jeff Sommer, the paper’s resident personal finance columnist.
Entitled ‘Wall St. loves to guess, and it’s often wrong’ the article eviscerates the pernicious influence of the financial forecasts that customarily appear at the turn of a new year.
Here’s one of my favourite extracts from the piece:
“There is no evidence that anyone can predict the market’s movements reliably, and a great deal of evidence that buying and selling stock on the basis of your views about the market’s impending movements is a fool’s game. Better to invest with humility: Accept that no one knows where the market is going moment by moment, and focus on the long haul.”
The Flaws of Forecasts
In Ancient Rome they were called augurs, a priesthood among the patrician class who were trained in interpreting the behaviour of birds. From this means of analysis it was allegedly possible to forecast whether the gods would look favourably on proposed policies. Consequently, the senate would debate the augurs report very seriously before arriving at a decision.
In the contemporary world, we now have financial forecasters and be it the economy, politics, or wars, forecasting is big business. However, Nigel Lawson, the former British chancellor who passed away in April 2023, declared an intense disdain for the work of the city of London's financial forecasters. Surely, if economic forecasts had merit, wouldn't a chancellor be the first to place any stock in them? In his retirement years, Lawson stated the following:
“There is an understandable illusion that because economic outcomes, unlike, say, foreign policy outcomes, can be quantified, mathematical equations can be applied to the former area, even though they are clearly inapplicable to the latter. But it remains an illusion, since the fact that economic outcomes can be quantified in no way mitigates the uncertainty that attaches to all areas of human behaviour.”
In 1997 William Sherden published ‘The Fortune Sellers: The Big Business of Buying and Selling Predictions’. His conclusion? Sherden found that the forecasts of private sector economists are quite simply no better than guesses. As Jeff Sommer’s NYT piece above would testify, forecasting has not improved over the years.
Time Warp
Let’s travel back in time one year. Here’s a summary of some of the major events of 2023:
Three midsized U.S banks collapsed
Major strikes took place in the U.S automaker and entertainment industries
The Russo-Ukranian War continued, with no end in sight
There would be four hikes to interest rates
US household debt reached an all-time high
A new war broke out in Israel, taking most geo-political commentators by surprise
Predictions of a global recession were widespread
If one were to possess a crystal ball at the start of 2023, with access to such information, then it’s not hard to see how some financial forecasters may have predicted a turbulent year for investors. However, that wasn’t the case. Let’s now take a look at the yearly returns for 2023 across the major indexes in the US, the world’s largest stock market:
Dow Jones: +14% (all-time high)
S&P 500: +26% (all-time high)
NASDAQ: 45% (within 5% of an all-time high)
What conclusions can we take from this?
Markets can rise when the economy appears weak.
Markets can plummet when the economy looks strong.
How will the stock market perform in 2024?
Who knows?
All I know is that over many decades, the stock market's long-term trend has been to rise. As long as capitalism can sustain itself and companies continue to profit, the stock market will likely grow in value over the long haul.
The Same Procedure As Every Year?
Remember how I mentioned that I was in Frankfurt over the yuletide period?
On New Year’s Eve, Mrs Sloth’s parents hosted a cosy, warm celebratory party to say auf Wiedersehen to 2023 and to say hallo (yes, that’s the extent of my German, unfortunately) to 2024.
It’s not the first occasion that I’ve spent New Year’s Eve in Germany but it is the first time I took part in what has now become a firm German tradition.
The picture above showcases a scene from ‘Dinner for One’, a comedy sketch originally written for the theatre by British author Lauri Wylie. In 1962 a German TV broadcaster recorded the sketch performed by two British comedians, Freddie Frinton and May Warden. This 18 black minute black and white recording is now traditionally viewed by Germans on New Year’s Eve and has also proven popular in several other European countries such as Austria, Switzerland, Sweden, Finland, Denmark, and Estonia.
As I sat down with Mrs. Sloth’s family and the other guests on New Year’s Eve to watch ‘Dinner for One’ there was one phrase that was repeatedly uttered that struck a chord with me.
‘The same procedure as every year’.
As I heard this phrase I knew immediately that I wanted make reference to it in the first Sloth Investor blog post of 2024.
The reason is simple.
Regular listeners of the Sloth Investor podcast will know that irrespective of market conditions or financial forecasts, I am a firm advocate of the following procedures, repeated year after year:
Spending less than you earn
Investing regularly, whether things look ‘good’ or ‘bad’ (remember you don’t possess a crystal ball)
Investing in broad, globally diversified indexes
Firmly committing to investing for the long term (decades > days)
Okay, so that brings to a close my first blog post of 2024. I hope that your 2024 has started well. If you’re in need of a chuckle, you could do far worse than watching ‘Dinner for One’.
At the bottom of the page I have included it below for your viewing pleasure.
Just remember, the same procedure as every year.
So long for now…
Mr. Sloth
A helpful commentary. My investing behavior for 2024 will be “the same procedure as last year” Namely keeping an eye on my investments without doing much except watching them steadily grow. And with spare cash, investing in those self same companies which were chosen originally for their strong moats, making strong and needed products, and producing strong free cash each year. Happy New Year Mr. Sloth!