Because I live there. In Brussels to be exact.
I've lived in other countries and have extensively travelled in my life, but at the end of the day, even if it certainly isn't perfect in every way, Brussels is quite a good place to take a look at the world around you.
It's an international minded city, being the capital of Europe, but also the capital of a small multi-lingual country. The number of languages spoken on its streets is quite astounding and in the western world, probably only New York, London and Geneva would rank at least as high according to internationalisation metrics, if those exist.
Being in a small country also forces you to think outside of your own borders and consider things from the perspectives of others, which is not always a given if you live in a much larger country where domestic issues take precedence.
A specific aspect of living in Belgium also pushes you in the back towards investing in equities, and that is taxes. Taxes on salaried income are a killer here (top rate as of a bit more than 30k per annum is almost at 60% incl. social security contributions)... but capital gains are entirely exempt and dividends received are taxed at a flat rate of 25% (though no credit for any taxes paid abroad).
This is quite an impressive incentive to aim for capital appreciation !
dimanche 5 mai 2013
Why value investing ?
Okay, so why blog about value investing ?
It's not like I'm the only one interested in this. So what can I bring to the value investing discussion that isn't already out there ?
What I hope to do is bring out a few thoughts on investing that way from the perspective of Western Europe, but with a clear influence from the greats in the field, for the most part active in the U.S.
I'm also a firm believer in the greatness of the economic model of the western world, so that you won't see me focusing much on emerging markets.
I discovered value investing not that long ago, in the dark days following the fall of Lehman Brothers with the financial world more or less in absolute panic. My own employer was facing a tough period and the lack of new projects gave me quite some time during my work hours (hope my boss never hears about this !) to explore different publications starting with Warren Buffet's famous letters to his shareholders.
They were (and still are) a fascinating read. In rapid succession, I then read The Intelligent Investor, One Up on Wall Street, Beating the Street and even Security Analysis. I also got my hands on a copy of Klarman's Margin of Safety. In the meantime I devoured annual reports, one after the other, and even though I already had a good grasp of accounting due to my job, I delved into certain intricacies of IFRS and US GAAP thanks mainly to insights from co-workers more knowledgeable than me about them.
I tried, in these last few years, of straying from value investing, but each time I bought a hot growth stock or something of the like, I always ended up selling because I just couldn't sleep at night. Seems I'm even stuck with value investing !
I can't complain though. Compared to the 'market' which, in my case, I determined is the simple average of the results of the S&P 500 and of the EuroStoxx 50 (not corrected for currency fluctuations), I've done better each year for 4 years running now.
I may underperform in the future, but for now, that's been quite satisfactory for me.
A further kick I get out of this is that a very good friend of mine, who in the past was adamant that owning shares in individual companies was the only way to go, completely changed tactics after 08 and since then has only held index funds. I'm out to try and prove that indexes can be beaten !
It's not like I'm the only one interested in this. So what can I bring to the value investing discussion that isn't already out there ?
What I hope to do is bring out a few thoughts on investing that way from the perspective of Western Europe, but with a clear influence from the greats in the field, for the most part active in the U.S.
I'm also a firm believer in the greatness of the economic model of the western world, so that you won't see me focusing much on emerging markets.
I discovered value investing not that long ago, in the dark days following the fall of Lehman Brothers with the financial world more or less in absolute panic. My own employer was facing a tough period and the lack of new projects gave me quite some time during my work hours (hope my boss never hears about this !) to explore different publications starting with Warren Buffet's famous letters to his shareholders.
They were (and still are) a fascinating read. In rapid succession, I then read The Intelligent Investor, One Up on Wall Street, Beating the Street and even Security Analysis. I also got my hands on a copy of Klarman's Margin of Safety. In the meantime I devoured annual reports, one after the other, and even though I already had a good grasp of accounting due to my job, I delved into certain intricacies of IFRS and US GAAP thanks mainly to insights from co-workers more knowledgeable than me about them.
I tried, in these last few years, of straying from value investing, but each time I bought a hot growth stock or something of the like, I always ended up selling because I just couldn't sleep at night. Seems I'm even stuck with value investing !
I can't complain though. Compared to the 'market' which, in my case, I determined is the simple average of the results of the S&P 500 and of the EuroStoxx 50 (not corrected for currency fluctuations), I've done better each year for 4 years running now.
I may underperform in the future, but for now, that's been quite satisfactory for me.
A further kick I get out of this is that a very good friend of mine, who in the past was adamant that owning shares in individual companies was the only way to go, completely changed tactics after 08 and since then has only held index funds. I'm out to try and prove that indexes can be beaten !
Why did I get started on this blog ?
Multiple reasons, but the trigger, if you will, was not value investing related (at least directly) but was in fact a comment made to me a few days ago by one of my colleagues at work.
During a conversation about stuff outside of work, she told me that, at the end of the month, the balance on her bank account barely reached 0.
She and I work in an industry that pays farely well, and we are both quite specialised in our activity so that people in our line of work generally command salaries which, at worst, are not too bad. Having a bit less seniority than I have, she probably makes a bit less than I do, but her husband is a partner in a successful lawfirm, so that should already help quite a lot.
But what struck me the most, was the difference with my own situation. My wife is a civil servant and her remuneration in no way compares to that of my colleague (I would believe) and I think I haven't made bad career choices up to now, but I'm clearly not a hot shot partner raking in the dough.
At the end of the month, though, month in month out, my wife and I can save on average 4.000 euros (which we invest in a value investing kinda way, subject of most of this blog). I have to add immediately that we don't feel deprived of anything and can buy more or less whatever we need or even want. We pour significantly too much into our house. All in all, I can't complain with the quality of life we have and - psychologically - when talking with my colleague, I really had the impression my life was 'nicer to have'.
So, what does starting a blog have anything to do with this ?
Well, if I had told my colleague directly what I've written above, I don't think I would immediately have had an impact. She could have argued her way out because of her special/different situation, etc. I don't think talking about this stuff is easy, especially if you're the one not saving anything. And giving lessons is not my type, I'd rather 'lead by example', write something down, to be read by someone later on, who would perhaps find something interesting in there and make use of it.
The reason why I'll focus on value investing is that it's value investing which essentially taught me that saving was essential. But once you learn to save, value investing is like engaging warp drive financially.
Hope someone, somewhere, finds some of this useful 'cause I'm about to get naked with my savings, process, ideas, and the like !
During a conversation about stuff outside of work, she told me that, at the end of the month, the balance on her bank account barely reached 0.
She and I work in an industry that pays farely well, and we are both quite specialised in our activity so that people in our line of work generally command salaries which, at worst, are not too bad. Having a bit less seniority than I have, she probably makes a bit less than I do, but her husband is a partner in a successful lawfirm, so that should already help quite a lot.
But what struck me the most, was the difference with my own situation. My wife is a civil servant and her remuneration in no way compares to that of my colleague (I would believe) and I think I haven't made bad career choices up to now, but I'm clearly not a hot shot partner raking in the dough.
At the end of the month, though, month in month out, my wife and I can save on average 4.000 euros (which we invest in a value investing kinda way, subject of most of this blog). I have to add immediately that we don't feel deprived of anything and can buy more or less whatever we need or even want. We pour significantly too much into our house. All in all, I can't complain with the quality of life we have and - psychologically - when talking with my colleague, I really had the impression my life was 'nicer to have'.
So, what does starting a blog have anything to do with this ?
Well, if I had told my colleague directly what I've written above, I don't think I would immediately have had an impact. She could have argued her way out because of her special/different situation, etc. I don't think talking about this stuff is easy, especially if you're the one not saving anything. And giving lessons is not my type, I'd rather 'lead by example', write something down, to be read by someone later on, who would perhaps find something interesting in there and make use of it.
The reason why I'll focus on value investing is that it's value investing which essentially taught me that saving was essential. But once you learn to save, value investing is like engaging warp drive financially.
Hope someone, somewhere, finds some of this useful 'cause I'm about to get naked with my savings, process, ideas, and the like !
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