AN APPROACH TO LONG- TERM INVESTING REACH YOUR FINANCIAL GOALS Benjamin Graham first published “The Intelligent Investor” in 1949, and the book has been acknowledged globally as the most significant investment guide of the 20th century. It has taught and inspired people worldwide, including Warren Buffett, who described it as one of the best books ever written on investing! According to Graham, those willing to devote energy and cultivate a specific mindset have the opportunity to generate profitable long- term investments. He was able to gain wealth by precisely evaluating companies in the stock market without taking any significant risks.
2022 was a difficult year for many across the world with the severe weather that damaged and destroyed communities. We experienced tornadoes, hailstorms, and the destructive force of Hurricane Ian here stateside, while the rest of the world dealt with its own share of tornadoes, floods, and cyclones. According to a report published by Swiss Re Institute, natural catastrophes in 2022 cost global insurers over $115 billion. Over the past decade, we’ve seen a steady increase of 5%–7% in estimated insured losses, and 2022 was the second consecutive year that we saw estimated insured losses grow over $100 billion. Swiss Re estimates that global economic losses for natural catastrophes in 2022 totaled over $260 billion, while man-made events accounted for another $8 billion lost. The insurance industry was able to cover 45% of the estimated $268 billion lost worldwide. Hurricane Ian led the pack when it came to the costliest natural catastrophe of 2022. Preliminary estimates predict that overall economic losses due to Hurricane Ian sit at $100 billion, of which $50–$65 billion is estimated to be insured. Swiss Re estimates that Hurricane Ian will be the second costliest insured loss in their sigma records after Hurricane Katrina in 2005. Interestingly enough, this hurricane season saw fewer storms than initially predicted, but the damages sustained made it the third most expensive hurricane season on record. Hurricane Ian was just one of many costly natural catastrophes the world saw in 2022. A series of winter storms that hit Europe in 2021–2022 has estimated insured losses of over $3.7 billion. Floods and hailstorms across the world caused more than $50 billion in insured losses, with Australia’s floods costing $4 billion on their own. These floods are actually Australia’s most expensive natural disaster in the country’s history. As we progress through 2023, many are predicting the trend of rising natural catastrophe losses to grow. Martin Bertogg, the head of catastrophe perils at Swiss Re, stated, “Extreme weather events have led to high insured losses in 2022, underpinning a risk on the rise and unfolding on every continent. Urban development, wealth accumulation in disaster-prone areas, inflation, and climate change are key factors at play, turning extreme weather into ever-rising natural catastrophe losses.”
Here are three lessons from “The Intelligent Investor” that can help you invest successfully!
Understand the value behind the business. Whatever stock you are looking to invest in, it is essential to know that it isn’t simply an asset. There is a real business behind it, and if you’re looking to invest long term, you must understand how much value the company has.
Some important questions to ask are: •
Is it worth the market price it trades at today?
• •
Is it overvalued?
Does it have potential growth in the future?
This can help you better understand how your investment could appreciate or depreciate over time. Just as Graham did, precisely evaluating versus guessing could make you a more successful investor. Don’t let bias lead you to bad decisions. One of the significant risks when investing is when investors allow bias to lead to wrong investment decisions. The news, economic forecasts, and others’ views can alter a decision. It seems as though investors become attached to information that tends to have little to do with the long-term value of their investments. That is why it is essential to prioritize your research over impulses. Focus on the facts . It can be easy to follow what the majority are doing. Still, you must rely on something other than the herd mentality to buy or sell your holdings. If you’re looking to invest long term, you must analyze your targeted stocks. This will help you make informed investment decisions rather than selling or buying based on what everyone else is doing. With Graham’s long-term investment strategies and understanding the basic do’s and don’ts of investing, you’ll be better positioned to become an intelligent investor yourself!
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