Lessons from the 10th Hole
I started my career on The Street of Dreams in October of 1991 as a stock broker with one of those many great regional brokerage firms that used to exist. There are still a few of them left but most of the old investment companies that used to be household names are gone. In 2004 I earned my CFA Charter. Now I own my own firm and I get to call myself a money manager. Change is inevitable. However, there are some constants in the investing world. As I start my 25th year in this business, I thought it might be fun to reflect on some of the things that I believe are constants in this sea of change.
Don’t fight the trend. Making money is much more important than being right about the market or a stock.
Don’t fight the Fed. They have more money than you do.
Dividends matter. A stock with a dividend that doesn't go up over time is basically a bond.
Relative Strength (Momentum) Investing works. So does Value Investing. Both Jesse Livermore (momentum) and Warren Buffet (value) made a lot of money although Jesse Livermore allegedly made more in inflation adjusted dollars than Warren Buffet did. Neither one of them was an index investor.
Some people should invest in index funds, paint their own house, change their own oil, and operate on themselves and……
I’m not aware of any wing of any hospital that was ever named after a day trader.
There are known knowns, known unknowns and unknown unknowns. Professional Investors generally know how to deal with the first two items. Amateurs aren’t aware that they exist.
Investment professionals are honest, competent and experienced. Many of the people who are licensed to sell securities or provide financial advice aren’t investment professionals.
Variable Annuities are generally bad investments. Indexed Annuities are always bad investments.
There is never anything new on Wall Street - ever.