The Strategic Investor: Part IV, Take Control by Letting Go

CC Image courtesy of Ben Stanfield via Flickr

CC Image courtesy of Ben Stanfield via Flickr

There are two recurring themes in a lot of these articles:

  1. Blind allegiance to the stock market can be dangerous.
  2. The wiring of our brains works against us as investors.

If the market wasn’t risky we wouldn’t need to worry about our faulty wiring because we wouldn’t have to make any decisions. If we were naturally suited to making good investment decisions under stress, a risky market would be less worrisome. However, the market is risky and our wiring is faulty – we need a strategy to deal with both. Continue reading →

3 Reasons Why Those “Top 10 Investment Themes for 2014” Articles Are Terrible

top10A couple of years ago I downloaded the “research” paper that inspired this article and then forgot about it. I was reminded of it today after coming across yet another “14 Investment Ideas for 2014” type article that are all the rage every January. The paper in question was produced and promoted by a very large investment firm that “specializes in serving families with a net worth of $100 million or more.” The title was “Ten Key Investment Themes” and was written by the firm’s Chief Market Strategist. So this information must be important. Let’s look at some excerpts (click to enlarge): Continue reading →

The Strategic Investor: Part III, Go Slow to Go Fast

the-tortoise-and-the-hareAesop was the author of the most tortured parable in the history of finance. Everyone knows that you’re supposed to bet on the tortoise over the hare. Slow and steady wins the race. It’s a winning message. Everyone likes the idea of steady returns. Steady feels solid.

The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money every day, as though they were working for regular wages.
-Jesse Livermore

Steady would be fine but, when it comes to the capital markets, it’s unrealistic. Investment markets are never permanently steady. They can be intermittently steady though. We’re coming off of Continue reading →

The Strategic Investor: Part II, Hating the Win

chess-strategyThe first part of this series was about how learning to “love the loss” could provide protection, put us in front of more opportunities, unlock time and help make us more objective thinkers. The indirect strategy of gaining by losing can be extremely effective when done right. This part of the series addresses the corollary to loving the loss – hating the win. Continue reading →

The Strategic Investor: Part I, Learning to Love the Loss

karatekid_450x300
What was the most memorable line of the original Karate Kid movie? Probably, “wax on wax off.” Remember that? This was the part where Mr. Miyagi had Daniel painting his fence and sanding his deck and waxing his cars:

Miyagi: [Miyagi returns from fishing as Daniel is painting the house] Oh, miss spot.
Daniel: What spot? Hey, how come you didn’t tell me you were goin’ fishing?
Miyagi: You not here when I go.
Daniel: Well, maybe I wanted to go, you ever think of that?
Miyagi: You karate training.
Daniel: I’m WHAT? I’m bein’ your goddamn SLAVE is what I’m bein’ here man, now c’mon we made a deal here! Continue reading →