Nov 18,2012 – Boring is Beautiful

Motley Fools came out with a nice article recently : 50 Unfortunate Truths About Investing  Check it out!

Personal Favorite Lines:

#1) Saying “I’ll be greedy when others are fearful” is much easier than actually doing it
#3) Markets go through at least one big pullback every year, and one massive one every decade.  Get used to it.  It’s just what they do. 
#9)  The more comfortable an investment feels, the more likely you are to be slaughtered.

 #10) Time saving tip: Instead of trading penny stocks – just light your money on fire.  Same for leveraged ETFs.

#12) The analyst who talks about his mistakes is the guy you want to listen to.  Avoid the guy who doesn’t – his are much bigger.
14. There will be seven to 10 recessions over the next 50 yearsDon’t act surprised when they come.
17. Most of what is taught about investing in school is theoretical nonsense. There are very few rich professors.
20. The market doesn’t care how much you paid for a stock. Or your house. Or what you think is a “fair” price.

#25) Professional investing is one of the hardest careers to succeed at, but it has lowbarriers to entry and requires no credentials. That creates legions of “experts” who have no idea what they are doing. People forget this because it doesn’t apply to many other fields.

31. The low-cost index fund is one of the most useful financial inventions in history. Boring but beautiful. 

32. The best investors in the world have more of an edge in psychology than in finance.

33. What markets do day to day is overwhelmingly driven by random chance. Ascribing explanations to short-term moves is like trying to explain lottery numbers.

34. For most, finding ways to save more money is more important than finding great investments.

35. If you have credit card debt and are thinking about investing in anything, stop. You will never beat 30% annual interest. 

(I think this is partially the reason why WSY  loves Visa and Mastercard.  I recall he has those two stocks in his personal US portfolio for quite some time, ever since those two had an initial public offering a few years ago in 2008/2009).

37. The odds that at least one well-known company is insolvent and hiding behind fraudulent accounting are high.

(Scary!)

41. For many, a house is a large liability masquerading as a safe asset.

43. However much money you think you’ll need for retirement, double it. Now you’re closer to reality.

45. Remember what Buffett says about progress: “First come the innovators, then come the imitators, then come the idiots.”

46. And what Mark Twain says about truth: “A lie can travel halfway around the world while truth is putting on its shoes.”

50. The most boring companies — toothpaste, food, bolts — can make some of the best long-term investments. The most innovative, some of the worst.

 

– Faceless Trader

 

 

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