This is the part of the cycle that reminds me of the great Galbraith quote regarding the financial market memory "lasting, at most, no more than 20 years." For me, at y2k and dot.com mania it was a true free-for-all.....Stock tips sprouting from cab drivers and shoe shine guys (both existed en masse, back in the day). But for whatever reason the one I recall most was Telefonos de Mexico. Why I was invested in it still sobers me up, as does the later realization that it was joking referred to as "Taco Bell" on WS. True due diligence is a lesson learned!
This article is about an investing "truth", of which we all need to periodically "remind ourselves"! Thanks for this reminder!! You might want to make yourself aware of BuySellDoNothing.com, a proof of concept website (where so far, everything has been free since inception, with coupon code 123), with a very interesting "About Us".
It is very difficult for the average person, and even professional investors and money managers, to remove or even limit emotion from investment decisions. Behavioral economics is underrated and misunderstood, but it explains the actions of humans better than the so-called perfectly rational investor and consumer described by economists. It is time in the market, not timing the market that will reward you in the long run. When you feel enthusiastic about the market, it is time to reduce your equity exposure back to your target asset allocation. When you literally feel like you are going to puke (as a friend told me in early 2009) and your emotions scream that it is time to sell everything, you need to back up the truck and buy big time. Whatever the latest investment fad, ignore it and stick with your investment principles and asset allocation. If you are going to speculate, limit your maximum exposure to a designated small portion of your overall portfolio and don’t exceed it, no matter the noise from the crowd. Of course easier said than done. Thoughts from a long term investor who made his first stock purchase in 1974. (Dresser Industries, if anyone even remembers the company).
Great post!!
Exceptional individual investors have a behavioural advantage... staying calm amidst the storm
I don't disagree. Almost as if you could just turn off all media and disappear during the turmoil.
This is the part of the cycle that reminds me of the great Galbraith quote regarding the financial market memory "lasting, at most, no more than 20 years." For me, at y2k and dot.com mania it was a true free-for-all.....Stock tips sprouting from cab drivers and shoe shine guys (both existed en masse, back in the day). But for whatever reason the one I recall most was Telefonos de Mexico. Why I was invested in it still sobers me up, as does the later realization that it was joking referred to as "Taco Bell" on WS. True due diligence is a lesson learned!
This article is about an investing "truth", of which we all need to periodically "remind ourselves"! Thanks for this reminder!! You might want to make yourself aware of BuySellDoNothing.com, a proof of concept website (where so far, everything has been free since inception, with coupon code 123), with a very interesting "About Us".
Great post!!
It is very difficult for the average person, and even professional investors and money managers, to remove or even limit emotion from investment decisions. Behavioral economics is underrated and misunderstood, but it explains the actions of humans better than the so-called perfectly rational investor and consumer described by economists. It is time in the market, not timing the market that will reward you in the long run. When you feel enthusiastic about the market, it is time to reduce your equity exposure back to your target asset allocation. When you literally feel like you are going to puke (as a friend told me in early 2009) and your emotions scream that it is time to sell everything, you need to back up the truck and buy big time. Whatever the latest investment fad, ignore it and stick with your investment principles and asset allocation. If you are going to speculate, limit your maximum exposure to a designated small portion of your overall portfolio and don’t exceed it, no matter the noise from the crowd. Of course easier said than done. Thoughts from a long term investor who made his first stock purchase in 1974. (Dresser Industries, if anyone even remembers the company).
Extremely wise words, RP! (And, yes, I do remember Dresser. The name. Nothing beyond that!)