| The School of Hard Knocks |
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of the 20th century gave very different advice than I had read before. By the end of
influential early 20th century authors I read called this notion "buy and hope."
adapting them to the new realities, I was rewarded with greater and greater success. I'm
become, "What works most of the time does not work in the long run." Below, I have
partially summarized what the bear market has taught me so far.
influential early 20th century authors I read called this notion "buy and hope."
adapting them to the new realities, I was rewarded with greater and greater success. I'm
become, "What works most of the time does not work in the long run." Below, I have
partially summarized what the bear market has taught me so far.
will have little effect on one's wealth accumulation. It will be "dumbed down" to the
outperform an index fund. And, the portfolio is still subject to the greatest risk -- the risk of
the market changing direction. It is better by far to have fewer stocks, carefully selected
than by diluting a portfolio with dozens of stocks, hoping for a few out-performers.
outperform an index fund. And, the portfolio is still subject to the greatest risk -- the risk of
the market changing direction. It is better by far to have fewer stocks, carefully selected
than by diluting a portfolio with dozens of stocks, hoping for a few out-performers.
large losses. It is true that good companies will probably go up eventually in a bull market,
but not always. All investors must make a basic, fundamental decision: to sell investor will
between a great investor and everyone else, investor has an emotional investment in his
buy decision, and cannot easily sell. Thus, too often, small losses turn in to large losses. It
buy decision, and cannot easily sell. Thus, too often, small losses turn in to large losses. It
is true that good companies will probably go up eventually in a bull market, but not always.
have one's money intact. Or, to hold and enjoy the opportunity for the investment to rise in
value. One cannot have it both ways. Life offers unlimited opportunities, but only limited
investment funds. Therefore, it is always much more important to protect principal than to
hold a loser and hope. Of course the investment that is sold is likely to eventually go up.
But, there is a seemingly endless parade of other
but not always. All investors must make a basic, fundamental decision: to sell investor will
between a great investor and everyone else, investor has an emotional investment in his
buy decision, and cannot easily sell. Thus, too often, small losses turn in to large losses. It
buy decision, and cannot easily sell. Thus, too often, small losses turn in to large losses. It
is true that good companies will probably go up eventually in a bull market, but not always.
have one's money intact. Or, to hold and enjoy the opportunity for the investment to rise in
value. One cannot have it both ways. Life offers unlimited opportunities, but only limited
investment funds. Therefore, it is always much more important to protect principal than to
hold a loser and hope. Of course the investment that is sold is likely to eventually go up.
But, there is a seemingly endless parade of other
income. Real estate can be over-developed and expensive to maintain. Stocks may lose
invests carefully, follows written guidelines, is patient, is dispassionate about losses, and
income. Real estate can be over-developed and expensive to maintain. Stocks may lose
value quickly. The successful investor often choses one primary (or sole) asset class,
invests carefully, follows written guidelines, is patient, is dispassionate about losses, and
invests carefully, follows written guidelines, is patient, is dispassionate about losses, and
value quickly. The successful investor often choses one primary (or sole) asset class,
invests carefully, follows written guidelines, is patient, is dispassionate about losses, and
learns from his mistakes. Successful investing is a long-term process. Needy money
learns from his mistakes. Successful investing is a long-term process. Needy money
usually cannot make money. One who "must" make money in the markets often finds
needed patient, dispassionate objectivity can be hard to find when inappropriate emotions
come into play.
invests carefully, follows written guidelines, is patient, is dispassionate about losses, and
income. Real estate can be over-developed and expensive to maintain. Stocks may lose
value quickly. The successful investor often choses one primary (or sole) asset class,
invests carefully, follows written guidelines, is patient, is dispassionate about losses, and
invests carefully, follows written guidelines, is patient, is dispassionate about losses, and
value quickly. The successful investor often choses one primary (or sole) asset class,
invests carefully, follows written guidelines, is patient, is dispassionate about losses, and
learns from his mistakes. Successful investing is a long-term process. Needy money
learns from his mistakes. Successful investing is a long-term process. Needy money
usually cannot make money. One who "must" make money in the markets often finds
needed patient, dispassionate objectivity can be hard to find when inappropriate emotions
come into play.
and are impatient for wealth are usually doomed to develop maturity first, success later.
grateful for whatever he has. He is a good steward of his resources, keeping debt low,
saving regularly, living on only a portion of his earnings. Against this background, the
successful investor can embrace risk objectively, control it prudently, watch it patiently,
and gather his rewards quietly. I will never forget hearing Prof. Thomas Stanley of the
University of Georgia speak to a Merrill Lynch conference I attended a number of years
ago. Dr. Stanley had done a study of wealth in America, and published a book called,
The Millionaire Next Door. It was explained to us that wealthy individuals generally did not
advertise their success. The average millionaire was in his mid 50's, drove an average
car, lived in an average home, was careful about how he spent his money, avoided debt,
was worth. After 25 years observing clients and their money, I know Dr. Stanley has it
right. The successful investor is usually a humble person.
Finally, I have learned that a successful investor is often also of humble means. I know
school teachers making $40,000 who have accumulated over a million dollars, and
doctors making $400,000 who don't have half as much.
grateful for whatever he has. He is a good steward of his resources, keeping debt low,
saving regularly, living on only a portion of his earnings. Against this background, the
successful investor can embrace risk objectively, control it prudently, watch it patiently,
and gather his rewards quietly. I will never forget hearing Prof. Thomas Stanley of the
University of Georgia speak to a Merrill Lynch conference I attended a number of years
ago. Dr. Stanley had done a study of wealth in America, and published a book called,
The Millionaire Next Door. It was explained to us that wealthy individuals generally did not
advertise their success. The average millionaire was in his mid 50's, drove an average
car, lived in an average home, was careful about how he spent his money, avoided debt,
was worth. After 25 years observing clients and their money, I know Dr. Stanley has it
right. The successful investor is usually a humble person.
Finally, I have learned that a successful investor is often also of humble means. I know
school teachers making $40,000 who have accumulated over a million dollars, and
doctors making $400,000 who don't have half as much.
My clients know that I believe that we are entering a period of history where that markets
-- and, personal management -- for the rest of our investment lifetimes. For those who will
My clients know that I believe that we are entering a period of history where that markets
personal management -- for the rest of our investment lifetimes. For those who
opportunity.
-- and, personal management -- for the rest of our investment lifetimes. For those who will
My clients know that I believe that we are entering a period of history where that markets
personal management -- for the rest of our investment lifetimes. For those who
opportunity.
buy or sell any security. The information contained herein is not meant to constitute specific investment
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| Don A. Slabaugh, LLC, 4335 Heartwood, Okemos, MI 48864 (517) 337-7804 |
| email me at donslabaugh@yahoo.com |