The One Thing That Hasn’t Changed In 300 Years

As we look at the world today compared to three centuries ago, we realise that many things have changed – from horse carriages to cars, from physical documents to electronic documents, and more. But do you know that there is one thing that has not changed over these 300 years? It is prudent financial advice, the one that keeps you from losing all your money.

Five academics recently wrote a book – Invested: How Three Centuries of Stock Market Advice Reshaped Our Money, Markets, And Mind – which covers a full 300 years of printed investment advice. That is amazing! But if you skim the contents, you will find that under different titles and guises, they mostly give the same rather good advice – advice that can be relevant to follow today as we are in the 18th century.

If you are curious already, then for today’s 137th week of our #SundayTimesRecap series, let’s read deeper into this article published in the last Sunday Times Invest section, “Good financial advice hasn’t changed in 300 years”, check out a bit of history and apply those relevant concepts for ourselves:

1. Thomas Mortimer, 1761. His “pioneering” guide to the market, “Every Man His Own Broker”, played on the popular idea that experts were rather overrated, and it became a hit, with five editions in just a little more than 12 months. The advice as the title suggests, is that we make sure we also do our due diligence and homework when checking out which stocks to buy.

2. Thomas Fortune, 1796. His “Epitome Of The Stocks And Public Funds” followed Mortimer’s success, which encouraged a raft of similar publications. In the 1800s, the joint stock boom created a whole new area for financial writers, and advice pamphlets on mining and railway stocks appeared in impressive numbers in the United States and in Britain – A Short And Sure Guide To Railway Speculation being a classic of the genre.

3. Boom in volume of publications. There are now tens of thousands of them. But what the book “Invested” makes clear is that the genre has changed very little since then, from Moses Smith’s “Plain Truths About Stock Speculation” (1887) and Burton G. Malkiel’s “A Random Walk Down Wall Street” (1973) to Jim Cramer’s “Mad Money: Watch TV, Get Rich” (2006) and “Don’t Panic! How To Manage Your Finances – And Financial Anxieties – During and After The Coronavirus” (2020), the basic messages are the same.

4. What can we learn from history that is still relevant today? Samuel Orchart Benton’s “Guide to Investing Money With Safety And Profit” (1870) was very clear that bond investors should divide their holdings among Turkish, Italian, Spanish, Egyptian and Argentine loans, rather than focus on just the one. Harry M. Markowitz modernised the idea in his classic “Porfolio Selection: Efficient Diversification Of Investments”.

5. What can we sum up from all 300 years of financial advice? Perhaps Malkiel describes it best: “It is not hard to make money in the market. What is hard is the alluring temptation to throw your money away on short get-rich-quick speculative binges. It is an obvious lesson, but one frequently ignored.” Therefore, think long term and keep your emotions in check.

6. Why are we not all rich yet? Even though we have so many publications on this money subject, and they all seem pretty straightforward. The answer is nearly given by the title of Richard Oldfield’s investing book, “Simple But Not Easy”. Books on entrepreneurism, weight loss and investing all tell simple truths. Just get started. Change your eating habits. Buy low and sell high. But they don’t offer magic – there is no special pill. To be thin, successful or rich, we have to do the actual work – eat differently, start a business, learn valuation methods – and most of the time, we don’t do that.

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We have been using finance books in the same way we use self-help books – more as a reminder of possibilities than anything else. It is time to change that – take action on what we have learned over the years and start investing while learning along the way. We don’t need more books, we just need to get started. To help you on the investing journey, join me and my teammates in our next webinar - “The Lifetime Income Streams” on Tuesday 14th Mar 2023 at 8pm, where we will share low-risk strategies that you can take action on to generate monthly lifetime income for your better future. It is much easier than picking stocks and you have more sense of peace. If you are excited to learn, register for a seat – select “Invited by Victor” here: https://www.thelifetimeincomestreams.com/tlisvip

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