Good Reads from Mr. PIE – Summer 2016 Edition

I thought I would share the various sites, books and podcasts that are currently helping to further my education on money, investing and life.

Each blog reference below is a link to a recent article I have enjoyed along with the actual blog site in parentheses.


It was the best of days, It was the worst of days (The Irrelevant Investor)

For those who enjoy investing quotes, you will probably have heard the phrase “Time in the market, not timing the market”. To be more blunt, choosing to dance in and out of the market is nothing more than a loser’s game. Michael Batnick, Director of Research at Ritholtz Wealth Management over at his blog, The Irrelevant Investor, provides some stunning data to convince you that a buy (through the market dips & upswings) and hold strategy for the long view investor is the way to go. The figure below says it all. From 1970 through early 2016, by missing out on the best 25 days (out of 11, 620), your returns would have gone down from 1910% to 371% or 6.7% to 3.4% annualized.

25 best days

Wowza! For those familiar with the 4% rule, this could quite possibly be the difference between portfolio success and potential failure. Worth taking seriously, those who think they can hoard cash to time the market.

Home Country Bias: The Worst Offenders (The Reformed Broker)

Another great blog from Josh Brown, again an advisor at Ritholtz Wealth Management. Come to think of it, these guys over at this company have some pretty darn good stuff. Anyway, the author speaks to the topic of Home Country Bias in the post. That concept of holding the largest part of your portfolio based on companies within your country of residence. I have a basic position on this concept. And it goes like this. If you are investing in large multinational companies such as Apple, Google, Pfizer, Johnson and Johnson, Coca Cola, then there is a good argument that you are getting global diversification anyway. Another argument speaks to currency fluctuations with international investing therefore another reason to hold domestic versus foreign securities. Take a look at this figure showing the investor holdings in domestic equities relative to the global index weight of that country.

home bias

Those in the US are guilty for sure (Mr. and Mrs. PIE are not at all surprised with this data) but the author takes to task the Canadians and the Australians. Particularly striking percentages. Perhaps any Canadian, Australian readers would care to weigh in with commentary on this bias. For what it is worth, the source of the data that’s discussed in the post is from a Vanguard 2016 report. Given that Vanguard has over $3 trillion in global assets under management, the data-set appears to be very robust.

20 Cognitive Biases that Screw up your Decisions (UK Business Insider)

Mr. PIE has written on this topic previously. We make countless decisions every single day, generally with the thought that we are making these decisions in our own best interest. Not so fast.  There are reported to be about 20 (!) behaviors that can really mess with your ability to make rational decisions. I’ll guarantee that you will be able to pick one or two at least from the list of 20 (I only show the first 4 here; please click through to the link to get the full list of 20) that may apply, or have been applicable, to your financial journey, investing approach or work situation.

cognitive biases


A Letter to my Unborn Grandchildren (Jason Zweig)

Jason Zweig is a world renowned personal finance columnist for the WSJ and long-standing blogger. In this late 2015 post, he take a very personal approach by writing a letter to his future grandchildren about life lessons related to home and family that he learned from his parents. Aside from being a simply wonderful read, a couple of sections on home ownership resonated with me. To put it into context, many folks put forward good arguments and see home ownership as a terrible drain on finance and a real hindrance to your ability to build wealth. Fair comment to be honest. But there is more, much more. A few paragraphs spoke loudly to me:

A home is more than a house. In ancient Greece, home was synonymous with family, as in the House of Atreus chronicled by the playwright Aeschylus; in the Bible, the House of Israel symbolized an entire people.

“A rental doesn’t have the same permanence,” says Prof.  Shiller of Yale University. “There’s an instinctive sense of territoriality shared by people and animals that a rental probably can’t fully satisfy.”

And a home is more than an investment; it is the place that helps shape who we are. Your generation, my grandchildren, may well be thankful that you don’t have to bear the burdens of owning a home — the mortgage, the maintenance, the pain of pulling up roots that run decades deep. My generation, and my mother’s, are thankful we had the blessings.

 I can imagine a lot of emotion as we sell our current home in the summer of 2018 and relocate our family to the mountains where the next phase of our family life continues.

A home is indeed more than a house. The article by Jason Zweig is a beautiful personal piece that offers some reflection on why.


The Perfect Storm (Sebastien Junger)

No, it is not another tail of the financial meltdown of 2007-2009. This is the story of the Andrea Gail, a swordfish boat out of Gloucester, MA and its six fishermen that perished in what was dubbed the “perfect storm” by meteorologists in October, 1991. Sebastien Junger tells an amazingly detailed story of life on a swordfish boat. He also gets into the complex characters that are New England fishermen, their significant others and the demons they face before even setting foot on a fishing boat – drugs, enormous debt, broken relationships and alcohol.  If you watched the movie with Mark Wahlberg as crew member Bobby Shatford and were riveted, the book will have you even more mesmerized. It is scary as hell and you will be in awe of the men and women who go out and fish the menacing waters of the North Atlantic.

the perfect storm



OK, another link to Ritholtz Wealth management. Trust me, I have no affiliation with these guys, other than really liking the material they put out! This podcast is from Barry Ritholtz himself, the CEO. He has put together a series called Masters in Business where he interviews experienced folks from the world of finance and business. I often listen to these in sections on the way to work or during a lunch-time walk or on a long drive to our mountain home at the weekends. There are two podcasts that I have listened to over the last few weeks.

  • Interview with Burton Malkiel, economics professor at Princeton University and author of the famous investing book “A Random Walk down Wall Street”. You may not know that Burt Malkiel wrote about and proposed the concept of index funds three years prior to John (Jack) Bogle founding Vanguard. This podcast is loaded with personal anecdotes on investing, great sound bites and a wealth of plain old common sense as it relates to wealth building. It is ~90 minutes long and worth every single minute.
  • Interview with Kelly Coffey, head of JP Morgan US private bank. This institution manages >$850 billion in assets and thus this woman carries significant responsibility in the world of J P Morgan and global finance in general. She is also a sponsor of the asset management women’s network. If you are looking for a podcast that speaks to the power of cross-functional training, getting outside your comfort zone and a less than common career path, this one has it all.

Well, those are a few things I have been reading and listening to over the last month.

What about you? What have you found as great reading or awesome listening material this fine summer?


  1. Hello Mr PIE,

    You asked for an Australian to answer about the graph and here I am 🙂

    I think there are 3 main reasons:

    1. Excellent performance. Up until recently (maybe 18-24 months ago) the Aussie sharemarket returns over the last 25 years have been extremely strong. That is mostly due to Australia having (almost) 25 years of continuous GDP growth, even during 2008 it kept going up (thanks China 🙂 ). So the locals have kept backing the local businesses.

    2. Franking credits ( ). In a very short example, for a person X who has no income other that dividends (and doesn’t earn enough to be taxed): if the Commonwealth Bank (and in this example its dividend yield is 5%) earns $100 in profits, it is taxed by the Govt at 30%. Leaving $70 remaining. It decides to pay all those profits to person X as a dividend but it attaches the tax paid as a ‘franking credit’ to that dividend. Person X receives $70 cash dividend. But, when they do their tax return they also declare they had $30 franking credits. On person X’s tax return, their total income is declared as $100 and they are paid the $30 as a tax refund. Therefore this system avoids taxing the $100 profit (in the company and then the individual), it also means it boosts the return to the individual. Therefore, with franking credits Commonwealth Bank’s yield is actually 7.14% to person X (5% divide by 70 times 100). Australian companies give Australian tax residents a superior dividend yield for the same profit.

    3. Accessibility. Correct me if I’m wrong, but USA investors can invest in UK & Canadian stocks using ADRs/ADIs (whatever they’re called)? UK people can invest in US stocks on the London Stock Exchange. Canadians can invest on the TSE? There is an extremely limited amount of international companies that are dual-listed in Australia. Therefore the options are either pay a lot in fees to own-outright the foreign shares, or own them through a fund which invests overseas (which many do). A lot of our big companies (such as resources) are multi country focused as well, as well as many of the big companies having a huge presence in New Zealand / Singapore etc.

    Hope that helps a bit 🙂 There will be a growing focus on international stocks as our economy slows down (probably will in 2017-2019). Australian’s retirement assets are growing extremely rapidly. I think Aus has the highest per-person retirement assets in the world, or will very soon and it’s also growing the most because of how much is being contributed each year. As our stock market is so small, more and more of this money will be invested overseas in time.


    1. Hi Tristan,

      Awesome information. Glad you laid out this in some detail. I kinda guessed you would reply and so glad you did. ?

      I like that franking concept. My, that is nice!! And who can argue with GDP growth.and performance.

      Most US investors can get international exposure through a plethora of index finds that can provide exposure to developed or emerging international markets. More now becoming available as ETF’s, if you fancy that investment vehicle. I think you have access to ETF’s in Australia, through an institution like Vanguard, is that correct?

      1. Glad you liked reading it. There is a Vanguard Australia (and others) and this is becoming increasingly popular as Australians realise there are more investments out there than just Australian ones 🙂 in 5 years the domestic investing will definitely be less. At least under 60% would be my guess.


  2. Great post! Availability heuristic is an amazing bias, I can’t believe how many people can have adamant opinions based on one case they have seen in real life, totally ignoring all other evidence. They are usually quite smart in other areas, but they will remain loyal to one crazy opinion because of this bias. (I have a friend who refuses to exercise bc a famous runner died from a heart attack. Her opinion is that exercise won’t prevent ill health. Never mind the millions of stories to prove otherwise!) Fascinating stuff. I’m in the “homeowner” camp, but for a long time I didn’t see the value. Sometimes we can go to the “other side!”

    1. Staci, thanks for stopping by. I must go check out your blog. Some evening reading for me.

      The tidal wave of information through social media feeds like Twitter and FB brings the availability heuristic into sharp focus for many of us. Tuning out that noise is hard and getting harder !

  3. Being from Belgium, our contribution to the world stock market would be far below 1pct. yet, a lot of Belgians invest in the BEL20 – our stock index.

    Some reasons I see:
    1- the media reports mainly on what the BEL20 is doing. when people hear a lot about this, this is what they invest in. Combine this with the mantra: invest in what you know and understand,…
    2- tax reasons: we pay a hefty 27pct of Belgian tax on any dividend we receive. Add to that the foreign tax. As such, dividend investors have an incentive to stay local. I am guilty on that bias as well. My DGI portfolio plans tends to be Belgium focused. That being said, some of the BEL20 companies are active worldwide…

    As for summer reading, both my wife and I are digging into suffocation to declutter our house and life

    1. Thanks ATL.

      I often wonder how my investing approach would have evolved if we did not move from the UK 18 yrs ago.

      Your point on investing on what you know and also being helped by media reports is a very real situation. Hard to fight that one especially when you add in a bit of peer group discussion (also from friends, colleagues and other local bloggers)

  4. Nice post! I just subscribed to the Masters in Business podcast, sounds great although maybe a bit too long of a podcast, I’ll definitely need to break it up over time.

    Also, those cognitive biases will really mess with you! That’s a great read and pretty shocking. Not only does reading that help you identify the areas of weakness in your own decision making process, but you can also see it in others. For example, take the confirmation bias and then listen to anyone talk about politics…like there is only one side to a coin!

    Thanks for the post!

    1. Yeah, break em up and they are stil great listening.

      There is so much reading in each cognitive bias. Scanning the list, it often jumps out which ones are hindering you. Except the blind spot one. You can’t see them……!!

  5. Interesting stuff! I am SO far behind in my reading, it is interesting to see these books. I do listen to podcasts a lot, though. It seems like I am busier in early retirement and have less time for these things than I did when I was working!

    1. I have to admit I don’t have as much time to read books as I would like. But doing fine with devouring financial blog material to further my learning there for our final laps before FIRE and beyond. I was hoping to have more time down the line but you got me thinking now!

  6. I love hearing what people are reading. My husband loves true survival stories, especially survival at sea. I can’t remember if he’s read The Perfect Storm yet. I just finished a parenting book, Parenting Your Powerful Child by Kevin Lehman, and enjoyed how practical it was. I’m waiting for The Power of a Praying Life to come in the mail today–that’s next on my list.

  7. Great recommendations! I’ll check out that podcast today. As they say, “in ten years you will be the same person except for how you’ve changed from the books you’ve read and the people you meet.” Great recommendations!

    1. These guys on the podcast have such words of wisdom. They have made mistakes and are humble to talk about it.
      If you pick up just one thing from each podcast, it is worth it alone.

    1. I think it may have been a tweet from you about the MoB series. Had been reading much of the Ritholtz folks stuff for a while but for some reason missed the podcast material. Duh!!

  8. Love the list here Mr. Pie! I haven’t seen the movie or read the book The Perfect Storm so I’m going to check out the book first. I almost always prefer a good book to its movie.

    1. Thanks for stopping by Dollar Engineer. I often wonder if I would have enjoyed the movie as much if I had read the book first. You will enjoy the book for sure. Sebastian Junger writes in great detail and a lot of emotion sprinkled in.

  9. The more I read blogs and listen to podcasts, the less attention span I seem to have for books. Thanks for the recommendations. “The Perfect Storm” sounds very interesting. I’ve seen the move but I’m sure the book would be more riveting.

    1. I have to agree with you. The sheer volume of blogosphere material never mind podcast awesomeness makes it overwhelming. But oh so enjoyable.

  10. Cognitive biases.. The scary thing is that we don’t realize what our cognitive biases are because we may be so used to doing things a certain way or we may not even know that what we are doing is a bias. The only thing we can hope for is to do our best to not have these biases and learn about some of the biases that are out there to try to be more cognizant and change our mindset!

    1. Yes, bit like a blind spot with all the biases!

      Focusing on the ones that often trip you up is practically the best way to deal with it all. Otherwise it can get overwhelming very quickly.

  11. I like your list !
    When I had a longer commute, I did enjoy the MoB podcast. It’s very interesting, even I find it too long (and hard to fit in my commutes now).
    I also like that you mentioned a gold, old book 🙂 I’ve promised myself to read more this year and so far so good. I would highly recommend Jim Collins’ recent ‘the simple path to wealth’. Not only is it simple, but it’s also a great book to gift a spouse / family members as the logical next step after ‘rich dad/poor dad’.

    1. I find the MoB podcasts are still great even when split up across a couple of commutes.

      Agree completely with your comments on the J Colins book. He invited us to do a review of the book before publishing and we were delighted to do it. We put up a post on our blog with the review. I gifted it to my dad and used it as a way to explain our path to FIRE.!! Awesome book in so many ways.

      1. How did your dad react to the whole FIRE thing? I haven’t shared this with anyone in my family yet, i’m a little curious to know how that went, if you don’t mind sharing?

        1. Great question. We will be putting together a post on how we shared our grand plan with parents and a few close friends. Watch this space!

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