Abnormal Returns is on a week-long break this week. That does not mean that we are content-free this week. As we did last year we asked a panel of independent bloggers a series of questions. This year we crowdsourced the questions from readers who won a copy of the Abnormal Returns: Winning Strategies from the Frontlines of the Investment Blogosphere for their efforts. We hope you enjoy these posts. Feel free to chime in with your own answers in the comments.
Check out the answers to yesterday’s question: Considering all the topics you have written about, which you you think is most underappreciated or overlooked by the majority of investors?
What piece of wisdom or advice do you most wish you had ignored? (submitted by Mortality Sucks)
Answers in order of response (first to last):
Phil Pearlman (Phil Pearman): “Stay in school.” School was a waste of my time.
Steven Place (InvestingWithOptions): That you have to be involved in the market 24/7. It’s very similar to weightlifting. If you try and go all out for 6 months, you’re going to get injured and not progress as much as you like. Instead, you need to plan “deload” weeks with lighter weight and more rehab. Same is true of markets. If you’re reading reports and ripping through charts 7 days a week, you’re going to get burned out.
Bob Seawright (Above the Market): “Do it because I said so.”
Robert Sinn (The Stock Sage): Price action must be confirmed by volume.
Todd Sullivan (Value Plays): I was dissuaded from going into investment banking by a family member when I was 21. Should have ignored it.
Ivan Hoff (Ivanhoff Capital): This must be the hardest question someone has ever asked me. Maybe going to college, at least the second time when I did it for my MBA. I could’ve used my time and money way more productively. But as some say – there are no mistakes in life, only lessons.
Roger Nusbaum (Random Roger): I’ve never bought into any one idea wholeheartedly. I’ve talked many times on my blog about taking little bits of process from many people to create your own process which is what I have done.
Scott Bell (I Heart Wall Street & MyGDP): Santa. He doesn’t exist. Neither does the easter bunny. I’m also still trying to wrap my head around the enigma that is Temporal Spatial Arbitrage. Your results may vary.
Kid Dynamite (Kid Dynamite’s World): Any hot tip – there are no shortcuts, no matter how tempting they seem.
Jared Woodard (Condor Options): Most “wisdom” is so vague, could it ever really be wrong?
Tom Brakke (the research puzzle): Early in my career, a very experienced investment professional said to me, “I don’t care if Roger stares at the moon to get his recommendations, just as long as they work.” Over time I found out that I didn’t agree with that at all.
Interloper (The Real Interloper): “Market’s never wrong.” almost always true for traders, almost never true for investors.
Rob (TechInsidr): Diversification. You always hear about the numerous benefits of diversification from academia (modern portfolio theory), but I always often question the value when it comes to applying diversification.
Toby Carlisle (Greenbackd): This is a tough question. Our confirmation biases means we already ignore lots of wisdom. There’s really no advice I wish I’d ignored. Ideas that I’ve adopted and then rejected were part of the process, and are as important as the ideas that I have not yet rejected.
DH (Dynamic Hedge): One of the first places I traded advised everyone to trade for “production” and to “get your volume up.” This was a shop where they were trading a very loosely defined arbitrage strategy designed to net out 1/2 a cent per share on large volume. As someone who needs to step away from the monitors frequently, this was the worst style ever for me. The lesson for me is to never blindly follow another trader’s strategy. You’ve got to find your own path.
Walter (Sober Look): Bill Gross’ short treasuries in 2011.
Sean McLaughlin (The Minimalist Trader): “It’ll take you about 3 months to get a hang of this [trading] and be consistently profitable” – said the people who introduced and got me into trading.
Eddy Elfeinbein (Crossing Wall Street): Return is related to risk.
Gary Evans (Global Macro Monitor): Apple’s earnings are not sustainable (three years ago).
David Merkel (Aleph Blog): I received advice not to go into investing when I was younger, and I put it off for about five years as a result, and took a very indirect route to make the rest of the trip. On the other hand, had I taken a direct route, I wouldn’t have gotten a lot of quantitative tools, and ways of understanding complex bonds and liabilities that I have today.
Josh Brown (The Reformed Broker): “When there’s blood in the streets, there’s money to be made.” – One of the all time dumbest things ever, shows no respect toward the fact that things can go way past where everyone thinks they can (or should). I’ve witnessed dozens of mean reversionists carried out of the pits feet first because of this stupidity.
Eric Falkenstein (Falkenblog): Wasting time on modern macroeconomics. Most economic models, in fact, are useless, pretentious, oversimplifications that aren’t helpful to someone uninterested in climbing academic status hierarchies.
Jeff Miller (A Dash of Insight): Any investment slogan! They all conflict and provide little real help. There are many paths to success, but it is not easy.
Brian Lund (bclund): I thought about this very hard. The biggest mistake I made was not seeking advice from good people. Instead I ALWAYS went with what I thought, which is a dangerous way to go through life if you are not careful.
Tim (The Psy-Fi Blog): When I was a youngish investor back in the 1980’s the received wisdom was that stocks were always the best asset class and purchasing “quality” stocks and holding forever was the best approach. This was utterly terrible advice on nearly all grounds possible, apart from the fact that there’s a nugget of truth at the heart of it. Stocks were the best asset class and buy and hold was an acceptable approach during the 1980’s and 1990’s, but what we didn’t understand was that twenty years is a small snapshot of time in investing lifespans. The decade since 2000 has been no less typical of normal markets – but we’d rather it wasn’t so.
Jeff Carter (Points and Figures): Buy and Hold on a stock that was tanking.
Eric Swarts (Market Anthropology): The New Normal.
Thanks to all the bloggers for their participation. Stay tuned for another question tomorrow.