Tuesday, December 9, 2014

Common Sense Based Investing 'Secrets' .... The 'Secret' Is In the Doing ... And the Best Time for the Doing is Always Now

Falling energy prices are once again teaching us a lesson in the folly of making short term market predictions. For example, who predicted a year ago that oil prices would fall dramatically this year and likely fall further to the less than $2 per gallon of gas range in 2015? Nobody.

And that's why long term individual investors shouldn't pay much if any attention to the musings of all the 'expert' prognosticators and so-called market pundits out there. That is not to say, however, that investing in blue chip stocks for the long term isn't the safest and best way to build and manage our financial assets. In fact, it absolutely is. So today let's dig a little deeper into the often misunderstood and sometimes scary world of investing in stocks. It's actually a safe and prosperous inflation beating way to enhance our financial security over the long haul.

Yesterday we listed 16 investing rules to live by for long term oriented individual investors. Today let's consider some additional investing pearls. 

25 of today's wisest investing axioms offers several useful reminders to individual savers and investors:

If he had taken some of these to heart, he might still have his shirt ... and his pants too.
"No one can predict what the value of any important economic variable will be a year from today....
Price and value are inversely related. We understand this in our everyday shopping. Yet when shopping on Wall Street, we lose our bearings — equating higher price with greater value.
  • Live within your means, save as much as you can, avoid debt and speculative investments and keep a long-term investment perspective. . . .
  • The stock market rewards patient investors and humbles speculators. . . .
  • Whenever someone says, “Real estate is a good investment because God isn’t making any more of it” I reply, “He’s not making any more salt water or sand either, what’s your point?”
  • . . . It isn’t a comforting thought that what most people know about the housing market they learned from a real-estate agent. . . .
  • There will always be reasonable sounding excuses to postpone investing in equities until things “get better” -- a phrase with no definition or identifiable point in time. . . .
  • The financial media can only tell us what happened, not what will happen. This is why the Weather Channel provides more value than CNBC. . . .
  • Nobody has 20/20 foresight and 20/20 hindsight never made anyone a nickel.
And finally ...
The value of good financial advice is a multiple of its cost; it's worth more than its weight in gold. Bad advice is worth less than its weight in sand. Eventually, all investors discover this truth."

Summing Up

Today's common sense but valuable investing 'tips' are very similar to those reviewed yesterday.

In fact, any such list would undoubtedly contain essentially the same general common sense advice.

Of course, it's always necessary to remember that common sense consistently applied in 'real life' isn't all that common.

The 'repetitive' point is quite simply that learning 'why' and then knowing 'what' to do when saving and investing for the long haul is important knowledge to acquire at an early age and then apply throughout adulthood.

And learning and knowing about the 'why' and the 'what' of individual investing isn't all that hard to do. It's the beginning and then the continuing of the good and repetitive act of doing that's the difficult part.

So as it has always been, it shall ever be. The 'secret' is always in the doing and the details.

That's my take.

Thanks. Bob.

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