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adrw // Andrew Alexander

Finance and Investing 101

Finance4 min read

Finance and Investing 101

Below are resources that educated and formed my knowledge and understanding of economics, finance, investing, and budgeting.

For a specific deep dive on the question of home ownership, see Buying a House?.

Books

  • MoneySense Guide to the Perfect Portfolio 2013 (Dan Bortolotti)
    • Review here
    • Read here
    • Excellent overview assuming little to no prior knowledge of interest rates, time value of money, stocks, bonds, RRSPs, and how to confidently understand personal finance and investing terms and concepts
  • Principles for Navigating Big Debt Crises (Ray Dalio)
    • Released in 2018 with key case studies of the 1929 Great Depression, 1920s Weimar Germany Hyperinflation, and 2008 Great Recession, and over 15 other studies of big debt crises of the past 100 years, Ray Dalio teaches you to pattern match these crises and understand the levers that governments and central bankers will use to try (sometimes unsuccessfully) to navigate a country's economy back on course.
    • This book has been instrumental in my understanding of current events with the 2020 COVID-19 recession and related actions by governments and central banks and made the news much more predictable with respect to those aspects.
    • It also formed my analysis framework when I've looked at whether the Canadian Real Estate market is a bubble and how it could pop, written in 2019
    • Read the book for free at Ray Dalio's site principles.com
    • Find other resources including Ray Dalio's book on life and work principles at principles.com and economicprinciples.org
  • Canadian Couch Potato
    • My first (and a great) introduction to all things index investing, tailored for Canadians
    • Many studies and example portfolios introducing investing to a general audience
    • Though I don't personally invest using a passive index strategy for any of my portfolios (except a small competition one), for many investors starting out index funds are a good, lower risk way to independently invest (though not fool proof or without its own downsides and caveats)
  • Mr. Money Moustache
    • This classic blog blew my mind early in university when I realized that retirement didn't have to wait until I was 65+. The author saved aggresively in his 20s and could effectively retire in his early 30s thanks to his very low ($24k USD living in Colorado) annual expenses (note: he has a paid off house so the $30k doesn't include rent).
    • Many great posts that cut against the materialist societal norms that lock most people in lifelong drudgery.
  • Venture Deals (Brad Feld)
    • Read here
    • Great overview from two lawyers of venture capital financing instruments and private company investments
  • Adaptive Markets (Andrew W. Lo)
    • Read here
    • Haven't read the full book (fairly academic) but the introduction and first few chapters document succinctly how the commonly spouted assumption that markets (specifically the stock market) are efficient (priced correctly) is verifiably wrong, and how markets are influenced by investor emotions and many other factors.
    • This realization and thus removing the commong "Efficient Market Hypothesis" assumption, ends up changing and inverting the assumed risk of many investing strategies (some low risk strategies are actually high risk, some high risk are not as high as we think), and explaining why smaller companies with higher information assymetry can be great opportunities given the new allowance that they are not priced efficiently.

Videos

  • How the Economic Machine Works (Ray Dalio, Founder of Bridgewater Capital)
    • Concise (30 mins) overview of a very accurate mental model of how the economy works. Extremely good place to start to start to understand the big picture of what an economy is.
  • 10 Secrets to Achieve Financial Success (Anton Kriel, Institute of Trading & former Goldmand Sacs trader)
    • Warning! Take this video with a grain of salt, Anton runs Institute of Trading and makes money from selling stock market education and training. I agree with many of his points in this video though am well aware that the filming (exotic locations, club music...etc) and general narrative is also targeted to encourage purchase of his training.
    • Key insight: not seeing money as what you can buy with it but just a number and becoming emotionally unattached in order to make investing decisions not motivated by greed or fear
  • Rent, Don't Buy! (Alex Avery, author The Wealthy Renter)
    • Though I haven't read the book, this interview on TVO's The Agenda provided an overview of the author's views and his counterpoints to the common notion that buying a house is always a good financial decision.
  • Matt McKeever YouTube

Other

  • The 10 Best Days (A. Stotz Investment Research)

    • Excellent overview of the literature on the benefits of staying invested in the market and tragic effects to your returns of trading in and out of positions

      "We looked at Seyhun’s 2003 paper. He calculated US returns over a long (1926-1993) and a medium-term (1963-1993) period of time. He found: missing the 12 best months reduced terminal wealth by 86%; missing the 10 best days reduced terminal wealth by 38%; and missing the 10 worst days increased return by 92%."

  • How missing out on 25 days in the stock market over 45 years costs you dearly (MarketWatch)

    • Related post to the above with graphs showing the case of keeping the best days, but getting rid of the worst days. Unfortunately top good/bad days often are close together so extremely difficult to time perfectly.
  • High school/uni investments classes (good overview of interest math and portfolio theory)

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