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Is 2020 the Year of the Investing Book?

by Rogers Gislason

Outside the investment world, 2020 has naturally gotten off to a harrowing start, for reasons I don’t need to state explicitly.

With the investment world, it’s been a very mixed year.

Initially, stock markets rallied strongly, below worldwide stock indices plunged in March to hit 12 month lows, reflecting the anticipated fall-out of business activity while economies locked down.

This lull was fortunately quite short lived however, with many indices seeing a partial or full recovery by August 2020. This was a response to stimulus, hopes for a ‘V-shaped’ recovery, and a new-found enthusiasm among retail investors for high-growth tech stocks.

In fact, the meteoric rise in certain tech stocks – in particular the famed ‘FANG’ stocks, i.e. Facebook, Amazon, Netflix and Google – as well as Tesla, has led to concerns that a tech bubble has occurred.

All of these individual trends and financial stories feels like a new and novel event. However, they’re not. This isn’t the first economic shock, nor is it the first tech bubble.

There are many mirrored examples in stock market history which we could reference to derive some information and predictions about what the future holds. Of course, the situation facing the world today does contain some very unique and 2020-specific elements, but the overarching macro picture is one that has been seen several times in the 20th century alone.

This is where investing books or investing courses come into play.

Online courses, and books have actually boomed during the lock-down, as they have provided unproductive workers with a positive and constructive activity to partake in while they’re furloughed from work.

Self-education is always a meaningful pursuit, whether the skies are clear or stormy.

But when done in pursuit of financial knowledge, in turbulent times, the insights gained from education could not only provide new ideas, but financial benefits too.

For example, investing books tend to cover a broad time horizon, with datasets often being 70 – 150 years long. This allows an author to make a credible case of ‘how things work, and how they’ve always worked’, backed by empirical data.

This has the effect of instilling values of patience and wisdom in an investing course consumer, as these pieces of information will increase in the confidence of an investor that the longer they invest in an asset class, the more likely the investment returns will revert to the historical mean.

How would investing courses have helped in 2020?

Applied to 2020, this sense of patience would have been very beneficial to investors. The dip in the markets in March was only temporary, therefore investors who held onto their stakes in listed companies and bonds have actually seen only modest falls in portfolio valuations on a year-to-date basis.

On the other hand, investors who were ‘spooked’ by the market volatility and did not heed the investing course warnings of applying a long time horizon to risk investments, may have sold at the dip, and watched through their fingers as the market robusted rebounded in the months following.