In the first few years of this blog I posted occasionally, but still much more than the last few years, on investing and economics. Now I mainly post on those topics on the Curious Cat Investing and Economics blog (see how the name and that practice are in sync with each other?).
I was recently interviewed about investing strategies and thoughts and decided to share that with the readers of this blog. Some excerpts from the interview:
We got out of the â€œToo Big to Failâ€ crisis, but have not addressed the core problems â€“ and likely have made them much worse. We didn’t take the opportunity to address the financial system risks created by the actions of â€œToo Big to Failâ€ banks. And it seems to me we have left the central banks in a very vulnerable position. They have already played strategies that previously seemed impossible due to the position they were placed in, and if it happens again, what are they going to be able to do? I think the risk of massive economic failure is large enough to consider in an investment portfolio.
How would you suggest an investor guard against the potential for a massive economic disaster?
John Hunter: My main thoughts on that are to greatly value companies that are likely to weather economic calamity greater than any since the great depression. Having tons of cash obviously helps (Apple, Google…). Having a business model that puts a company in a position to make money (even if it is a lot less than they are making today) if the economy does extremely poorly, is also good (Apple, Google, AbbVie…).
It is possible for the economy to be hit so hard Apple, Google, etc. lose money. But if that happens, I believe huge numbers of other companies are going to be out of business, and the economy will be in shambles…
The sleep well portfolio has beaten the S&P 500 by about 220 basis points (on an annual rate of return basis) (see details on how marketocracy calculates returns – they reduce returns by 200 basis points to simulate investment adviser fees). The interview includes much more details as well as links to posts on my investing blog going into more detail.