Kindly Stop Saying The Efficient Market Hypothesis is Dead

May 14, 2020 | Richard Meadows

There are whispers that the Efficient-Market Hypothesis (EMH) is dead.

Smart people say the EMH may have been the real victim of the coronavirus. These people, or their friends, were able to get ahead of the recent market crash. They sold stocks before the market reacted, or shorted them, or bought ‘put’ options, and made handsome profits.

They beat the market without having any special information! They were reading the same news and reports as everyone else. They made a profit by acting on public information that was right there for anyone to see. And so, the EMH is dead, or dying, or at the very least, has a very nasty cough.

I say this is wishful thinking: rumours of the death of efficient markets are greatly exaggerated.

How to Profit From Coronavirus

March 24, 2020 | Richard Meadows

There are a couple of cheap/free options you can to take out to limit the near-bottomless downside risk of COVID-19. I mentioned them in the last post, but they’re time-sensitive; hopefully you took those steps before the panic-buying began.

Now it’s time to think about the upside. When a black swan flaps its wings, great risks and opportunities swirl out of the same chaos.

So: what would it take to not just weather this situation, but profit from it?

The Optionality Approach to Getting Lucky

Last updated: November 20, 2020 | Published on October 11, 2019 | Richard Meadows

We’ve established that there is no such thing as cosmic justice: it rains on the just and the unjust alike. But over the course of a lifetime, we at least vaguely shuffle in the direction of getting what we deserve. The goal of this post is to get us from ‘vague shuffling’ to ‘slightly-more-purposeful ambling’.

If you want to get lucky, the usual advice is that you have to be prepared, and then wait for opportunities. This is not very helpful.

Instead of wandering aimlessly and hoping for the best, we can use a simple framework to figure out which opportunities are worth pursuing.

This is the filter I run over pretty much every decision these days. It’s called the optionality approach…

stockmarket charts: how safe are index funds, anyway?

Beware of Geeks Bearing Formulas

Last updated: July 3, 2020 | Published on July 29, 2019 | Richard Meadows

The history of finance is a history of brains dashed on the pavement. The fact that many people tend to be ‘irrationally’ wary of the markets starts to take on a new significance: the suspicious folk-wisdom has often been correct, while the ‘experts’ have consistently been dangerously wrong.

Hence Warren Buffett’s warning: beware of geeks bearing formulas…

wall street bull: what if the market crashed today?

If the Stock Market Crashed Today

July 6, 2019 | Richard Meadows

The sky is falling! The market is about to crash! The youth of today are corrupted! Every innocuous thing you love is Bad, Actually! Doomsaying is the grift that keeps on giving. Spread fear and doubt about some looming crisis—real or imagined—and you instantly take on a mantle of wisdom and moral authority. Best of all, you don’t need to […]

Futurama Taught Me Everything I Know About Compound Interest

May 13, 2018 | Richard Meadows

Futurama is one of the greatest cartoons of all time. If you haven’t seen this gem of the early noughties, here’s the basic premise: Pizza delivery boy Fry accidentally falls into a cryogenic freezer at the turn of the new millennium, and wakes up 1000 years in the future.

In the sixth episode, ‘A Fishful of Dollars’, Fry re-discovers his old bank account, which contained the princely sum of 93 cents at the time he was frozen. Over the 1000 years he spent as a human popsicle, he is told the balance has compounded from less than a buck to the staggering sum of $4.3 billion. Hijinks and capers ensue…

Advanced Investing: The Barbell Strategy for Investing

Advanced Investing: The Barbell Strategy for Bastards

Last updated: November 20, 2020 | Published on November 30, 2017 | Richard Meadows

Marry an accountant, but have occasional flings with rock stars. Lift very heavy weights for a few repetitions, then do lots of low-impact cardio. Work a secure and boring job, while pursuing highly speculative ventures on the side.
The common thread running through all these ideas is called the ‘Barbell Strategy’, and it’s useful for all sorts of big decisions – from your career and work, to health and fitness, and of course, your investment portfolio…

Reader Case Study: The 24 Year Old Millionaire

Last updated: September 26, 2019 | Published on October 5, 2017 | Richard Meadows

After I published my ‘coming out’ essay on the benefits of the frugal life, I got a message from an old school mate who’d been quietly following a similar path. While I was chuffed with hitting six figures by age 25, he totally blew me out of the water. Having successfully tapped into the property boom in our home city of Auckland, he’d managed to become a millionaire at the tender age of 24! Here’s how he did it…

The Worst Investment Ever: How I Lost $10,000 Catching a Falling Knife

Last updated: July 3, 2020 | Published on September 8, 2017 | Richard Meadows

It’s pretty embarrassing to air this story in public, but it’s for a good enough cause that I’ve decided to bite the bullet. Back in 2015, I was still picking individual stocks, and doing pretty well for myself. I probably thought I was hot shit. That is, before I made a series of really dumb mistakes which cost me US$10,000.

I would have reached my six figures savings goal much faster if I hadn’t screwed up, but I didn’t lose any sleep over the whole mess. In fact, I’m actually kind of glad it happened. I might be a slow learner, but hopefully you can wise up sooner than I did…

Use The Force to Win At Investing: Lessons From a Billionaire

How a Billionaire Taught Me to Invest Using the Force

Last updated: March 28, 2020 | Published on February 11, 2017 | Richard Meadows

Star Wars fans come in all shapes and sizes. Sometimes they look like scruffy, twenty-something writers from a small island on the arse-end of the world. Other times they look like besuited, seventy-year-old billionaire fund managers from the American mid-west. David Booth is co-founder of Dimensional Fund Advisors, which manages about $445 billion of investor cash. I didn’t get to ask him to weigh in on the Han vs Greedo controversy, but our conversation was still among the most life-changing I’ve ever had.

Becoming an investor: An animated guide for beginners

How to Become an Investor: An Animated Guide for Beginners

Last updated: March 28, 2020 | Published on November 17, 2016 | Richard Meadows

If you’ve hitched your wagon to the Deep Dish caravan, you’ve got a big problem on your hands: A bunch of small but powerful lifestyle tweaks have unleashed a tsunami of savings and filled your pockets with cash. What to do with all that lovely money? Getting started with investing is easy, and anyone can do it! Come join our hero Jimmy on his epic animated adventure from total noob to investing badass.

Open Your Eyes With Net Worth Tracking: The Number One Metric for Financial Success

Net Worth Tracking: The No-Bullshit Metric For Financial Success (Free Spreadsheet)

Last updated: November 19, 2019 | Published on October 20, 2016 | Richard Meadows

The definition of net worth is simple: It’s everything you own, minus everything you owe. This number strips away the preening, the posturing, and the peacocking, laying bare your real money situation. There’s nowhere to hide. Growing your net worth over time – by reducing debt and building up assets – is the only meaningful definition of financial success. Here’s how to do it.

Slash your spending and unleash a cash tsunami image

100+ Money Saving Tips to Slash Your Spending

Last updated: November 15, 2019 | Published on October 7, 2016 | Richard Meadows

These are the exact strategies I used to save $100,000 by age 25 – with a few bonus extras thrown in for good measure. Over the years, I’ve written more than 300 columns and feature articles about money. Now I’ve crunched all that research down into a summary of the very best saving tips, which will help you free up a tidal wave of cash…

All Life is an Experiment