Unless lower rated bonds and preferred stock have a huge upside, enterprising investors should avoid them. Lowe rated securities usually collapse in adverse markets. It is good to avoid foreign bonds. But ETF’s have mitigated for this problem, so do mutual funds that specialize in foreign bonds and lower-rated securities.
As long as the stock is not overpriced, buying them could protect against inflation and offer a higher return than bonds or cash in the long run. Four rules for the defensive investor. Adequate diversification (between 10 and 30 issues) Large, outstanding, conservative companies (top 30 percent of industry) Each company should have 20 years … Read more
The conventional wisdom is that the investor should match the amount they risk with their risk tolerance. But Graham says that the amount of risk that is taken should depend instead on the amount of intelligent effort the investor is willing and capable of expending and doesn’t depend on age either. The defensive/passive investor should … Read more
It is important to learn about the history of the stock market, so that you understand how stock prices are related to earnings, cash flow, and dividends. The price of a stock changes, according to real growth (company’s earnings and dividends), inflationary growth, and the amount of speculation (up or down). The PE 10 ratio, … Read more
Inflation is an investment concern because it depletes real wealth, and the purchasing power of profits and principal. Fixed income securities are usually most hard hit. The benefit of equity investments is that dividends and capital gains can make up for lost purchasing power – especially when compared with a bond that has a fixed … Read more
Keep investments and speculation separate. If you must speculate, make sure it is no more than 10 percent of investment funds. There is intelligent investment, but also intelligent speculation. Intelligent investing includes: 1) analyze soundness of business’ fundamentals. 2) a plan to prevent catastrophic loss. 3) pursuit of reasonable return. To speculate means to bet … Read more
A History of Western Philosophy is an excellent book, and one that will teach you not only about philosophy, but about history and politics. And Bertrand Russell is not an impartial commentator, but one of the most respected philosophers in history – which makes this introduction to the best philosophers of the last two millennia … Read more
John Dewey is another proponent of American Pragmatism. He had a profound influence on education and political theory. Russell agrees with much that he has to say. Like William James, Dewey was a New Englander, and he carries on the tradition of New England liberalism. Dewey was influenced positively by his visit to China, and … Read more
William James was a psychologist who made important contributions to philosophy. He invented “radical empiricism” and was one of the three protagonists of the theory called “pragmatism” or “instrumentalism.” He came to be known as the leader of American philosophy. In The Will to Believe, James argues that we are compelled to make decisions even … Read more
Without getting into the economic or political side of Karl Marx, I will mention an important contribution he made to philosophy, which was to emphasize the importance of action. He said, “Philosophers have only interpreted the world in various ways, but the real task is to alter it.” His idea was that the truth of a thought must be … Read more