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Investment Versus Speculation
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AUTHOR: Philip Stein on 4/1/2026
FIRST: Doug C on 4/1 | RECENT: Andy Morrison on 4/15
Cash Ain’t Trash
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AUTHOR: Philip Stein on 12/26/2025
FIRST: Winston Smith on 12/26/2025 | RECENT: David J. Kupstas on 12/27/2025
How Big Is Your Umbrella, Follow-Up
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AUTHOR: Philip Stein on 5/1/2025
FIRST: Ben Rodriguez on 5/2/2025 | RECENT: Philip Stein on 5/3/2025
How Big is Your Umbrella?
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AUTHOR: Philip Stein on 4/11/2025
FIRST: Edmund Marsh on 4/11/2025 | RECENT: baldscreen on 4/13/2025
Meet Marcus
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AUTHOR: Philip Stein on 6/23/2024
FIRST: David Powell on 6/23/2024 | RECENT: Bottom Feeder on 6/29/2024
MANY FOLKS EQUATE a stock market downturn with losing money. I often hear comments like, “I lost money yesterday. The stock market went down.”
I believe this impression of loss is an illusion, one that can be detrimental to our financial health—because it blinds us to certain fundamental truths.
1. Illusion of lost money. You only lose money if you sell shares at a loss. If you don’t sell amid a downturn,
I RECENTLY FINISHED reading the second edition of William Bernstein’s The Four Pillars of Investing—twice. This new edition is a significant rewrite of the first edition that was published in 2002. Even if you’ve read the first edition, reading the second edition is worth your time.
Though I’ve read most of the books written by well-known investment luminaries familiar to HumbleDollar readers, there were still pearls of wisdom I gathered from this second edition.
COMMENTARY ABOUT America’s wealth inequality seems to be everywhere. According to Wikipedia, as of 2021’s fourth quarter, Federal Reserve data indicate that the top 1% of households hold 32.3% of the country’s wealth.
Meanwhile, Pew Research Center reports that the median wealth of the richest 20% of American families increased by an inflation-adjusted 45% between 1998 and 2007, while the median wealth of middle-income families rose just 16%.
And then there’s the Federal Reserve Bank of St.
DURING MY 30s, I worked for a defense contractor. The Berlin Wall fell in November 1989 and the Soviet Union imploded just over two years later. Many at work believed that the end of the Cold War would lead Congress to reduce defense spending. Sure enough, layoffs at my company commenced soon after.
I was fortunate to avoid being laid off. I do recall, though, overhearing one coworker in his 50s who, after receiving a pink slip,
NASSIM NICHOLAS TALEB has written a trilogy on the topic of chance: Fooled by Randomness, The Black Swan and Antifragile. I didn’t find these three books to be easy reading, plus Taleb has strong opinions, which may turn off some readers. Still, there’s a host of investment lessons to be culled from his works.
Taleb argues that randomness plays a powerful role in financial markets and,
IF I MADE A LIST of all the dumb things investors do, I likely committed them all. I chased performance, sold stocks in a bear market, invested in things I didn’t understand—you get the picture.
Yet, despite the numerous setbacks I suffered before I matured as an investor, I was able to retire comfortably. How was that possible? My conclusion: compound growth. Indeed, I believe compounding is a surer way to wealth than picking market-beating investments.
Comments
Patrick, I agree with your characterization of gold as a form of money and a neutral store of value. But, as individuals, we are not yet at the point where we can use gold to purchase goods and services. For example, how would we use gold coins or bars to purchase groceries? At present, all we can do is purchase gold and store it away. If we wish to transact, we would have to sell some gold for paper dollars. If you believe that gold preserves our purchasing power, you may find this approach more appealing than a significant allocation to cash or bonds. One argument I’ve heard for purchasing gold, is to have it available to bribe border guards when attempting to flee tyranny. In this case, I would view a gold holding more as an insurance policy than a form of money.
Post: Investment Versus Speculation
Link to comment from April 4, 2026
Berkshire Hathaway’s current policy is to reinvest income rather than pay a cash dividend to shareholders. That portion of income that Berkshire uses to grow the business is reinvesting income for the benefit of shareholders who don’t have to reinvest themselves. In this sense, I would consider Berkshire an investment. When Berkshire purchases its own shares, it is not growing the business, but buoying the stock price. This is likely a sign that management is finding it difficult to identify compelling investment opportunities.
Post: Investment Versus Speculation
Link to comment from April 2, 2026
Mark, what are your thoughts on the appearance of these newly public stocks in total market index funds? If I’m not mistaken, Tesla appeared in Vanguard’s Total US Stock Market index fund before it was added to the S&P 500. Could the same situation be in store for these upcoming mega-IPOs?
Post: $3 Trillion S&P 500 Gatecrashers
Link to comment from March 21, 2026
The HumbleDollar up/down arrows remind me of the Like/Don’t Like buttons on social media web pages. The latter, I presume, feed algorithms that determine ad pricing and content feeds. Since HD does not allow advertising (thank goodness), or feed different content to different readers, I have to question the value of up/down arrows. Were some of the features of social media web pages simply copied to HD when the website was being developed? The whole purpose of HD, as I understand it, is to promote commentary so readers can shares ideas, information, and experiences. Just clicking an up or down arrow doesn’t add much to the conversation. I do have one question: How did you earn the sobriquet “DrLefty?” Are you left-handed?
Post: The “Mean Girls”/Junior High Bullies at HumbleDollar
Link to comment from January 10, 2026
I suspect that the tale of the anonymous investor who enjoyed a $70 million dollar profit from S&P 500 call options will lead a number of people to conclude that buying call options on the S&P 500 is the path to riches. But that investor was extraordinarily lucky. Consider what the media is not offering: stories about the much larger number of people who invested in S&P 500 call options and lost money. No one is interested in those stories. As Nassim Taleb warned us: don’t be “Fooled by Randomness.” Also, we know that correlation does not imply causation. Yet, Taylor Hamm seems convinced that paying $25 for a spell was responsible for her good fortune. I’ll guess that she’ll be buying many more spells in the future.
Post: Money Moments
Link to comment from December 27, 2025
One of those opportunities for spontaneous giving might include the tip jar at take-out eateries.
Post: Cash Ain’t Trash
Link to comment from December 27, 2025
Dan, thanks for mentioning the need to have smaller denominations available. If you only stockpile large denomination bills, you might find it difficult to purchase simple items in, say, a convenience store.
Post: Cash Ain’t Trash
Link to comment from December 26, 2025
I recently finished re-reading William Bernstein’s Four Pillars of Investing. Your strategy is consistent with the advice Bernstein offers in his book. I’d say you’ve done well and should continue to do so.
Post: Your Portfolio, Your Business
Link to comment from October 4, 2025
Like all HumbleDollar readers, I’m heartbroken after learning of Jonathan’s passing. I feel like Socrates’ students must have felt after their master drank his fateful cup of hemlock. My teacher, my guiding light is gone. I shall not see another like him in my lifetime. Rest in peace, Jonathan.
Post: Farewell Friends
Link to comment from September 22, 2025
Bogdan, welcome to the HumbleDollar site! A few questions for you: How did you meet Jonathan? What were the circumstances by which Jonathan chose you as moderator of the site? What is your day job? Do you have an independent accounting practice, or are you employed by a large firm? In addition to CPA, do you have any plans to become a financial advisor?
Post: Quick Intro
Link to comment from September 21, 2025