It’s Frank Armstrong Day again, and a good time to think about what Armstrong is good at.
His first book, and the one nearest and dearest to my heart is Investment Strategies for the 21st Century. More recently he took the same kind of approach in The Informed Investor.
While there are plenty of books explaining how to consult goat entrails and pick the next Apple (or do something even sillier), Armstrong demystifies investing with one clear, coherent building block at a time. This is invaluable for someone starting in investing or someone who should start over.
The stock market has had great returns over time. Oddly, most investors do not get those great returns. Armstrong walks you through why that is and how you can avoid walking into the same traps.
He explains things that we think we understand but don’t. For example, in everyday life “risk” means “bad stuff can happen”. In investing it means “degree of predictability.” So, in investing terms bonds are low risk, even though they may lag behind the inflation rate and slowly and predictably lose you money. A stock index fund is “riskier” because it is less predictable in the short term, even though in the long term it will very likely make you much more money than the bonds will lose you.
These are the kind of explanations we need, and they’ve made the difference in a lot of people’s lives. Thanks, Frank.
