Last week we had a series of posts up with a slew of finance bloggers answering some thoughtful questions on investing. Since turnabout is fair play we decided to answer the questions as well.
A lifetime of good investing starts with the realization that you alone are responsible for you own investments. So many investors feel the need to deflect their errors on to some other party whether it be the markets themselves, corrupt politicians or incompetent money managers. You can’t really become a confident and competent investor unless you decide to focus on your own actions. Once you can make this leap then you can really start focusing on a lifetime of learning and education.
In the past year what book, article or blog post changed the way you think about an important topic? (Need not be investment-related.) (Inspired by Robert from Portland, OR)
I have a hard time coming up with just one. But I have been struck this past year by the negativity surrounding the world of investing. That is why writing “There has never been a better time to be an individual investor” clarified some things for me. Things are pretty good right now for some one who is trying to be an accomplished investor. The bottom line being that you can’t give up on working to be a better investor just because everything doesn’t seem rosy at the moment.
If you could work, without pay, with any investor or trader for one year, who would it be? (submitted by Jeff from Illinois)
Having just read Hedge Fund Market Wizards by Jack Schwager I might want to tag along with him for a year and ask a bunch of accomplished investors how they go about their craft.
I was going to say the low volatility anomaly but that idea has gotten some more attention of late. One topic from my book that almost every investor could take advantage of is dramatically decreasing their consumption of financial news. One need only look at the coverage of the recent Greek election to see that following these matters in real-time is at best a distraction and at worst a real hazard.
What piece of wisdom or advice do you most wish you had ignored? (submitted by Mortality Sucks)
“You can never go broke taking profits.” The fact is that it is really easy to go broke taking profits provided that your gains are small and your losses are large. The idea of expectancy is one widely misunderstood by beginning traders.
What asset (stock, fund, etc.) would you feel most comfortable buying and holding for the next ten years? (submitted by Anonymous)
A couple of answers. The first is single family homes in stable areas as rental properties. With 30-year mortgage rates at sub-4% levels it now seems like it pays to be a landlord these days. All you need is home prices to stabilize for awhile to make real money. The second is a total return swap of US Treasuries for US equities. Now that this is a positive carry trade it seems like things are now in equity investors’ favor.
Thanks again to all the bloggers who chose to participate. I hope you enjoyed this year’s edition and learned a little something along the way.