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Don’t Go There

Ken Begley

I’VE MADE A LOT OF investing mistakes in my time. In fact, if I ever wrote a book on investing, the title would probably be Don’t Go There, It Sucks.

I’m a Kentucky hillbilly and, yes, that’s hillbilly talk. Another local colloquialism is, “Careful, or you’ll end up like Scrambo Hill.” I don’t know who Scrambo was. But apparently, he resided around our parts at one time, and you don’t want to end up at the bottom of the barrow like him.

Let me say first that Cindy and I are financially secure today because we’re supersavers—and despite my investing skills. My two big mistakes are fairly common: trying to time the market and constantly shifting my investment style.

You know what? Everybody has heard of Warren Buffett. He’s the senior statesman of Wall Street with an investment record to die for. Has anybody heard of Ken Begley? Uh, doesn’t ring a bell? Well, that’s my name at the top of this column. So, if everybody has heard of Warren Buffett and Warren constantly says that he can’t time the market, why does Begley think he can?

That wasn’t a trick question. He can’t or, rather, I can’t. So, why do I try? Out of sheer freaking fear. Here’s what I’ve learned about myself: I have been a part of many a good panic and sometimes led a few. Why? I can’t stand losing money, even if it’s only short-term paper losses, and it sometimes causes me to make rash decisions. I’m not stupid, but sometimes I can be.

Cindy and I had accumulated what, for us, was a large net worth in the late 1990s, with a fair amount of our money in the stock market. Even with a relatively conservative portfolio, the sinking and soaring of said market would involve larger and larger amounts of money. The euphoric feelings of the gains never equaled the despair of the losses. At one point after Sept. 11, 2001, our net worth had plunged about 25%.

I always think of money in terms of how long we had to work to accumulate it. To me, money is stored work. That 25% loss was the equivalent of some three years of gross income, and it happened pretty dang quick. It was unnerving to say the least.

To my credit, I didn’t sell in a panic and, due to dumb luck, even bought a bit when the market hit bottom. But then I did something that was really stupid. I started selling out a huge part of our portfolio in bits and pieces as the stock market rose. The money ended up in low-interest-bearing accounts, which we then held for years.

I couldn’t even tell you how much money we could have had today, even considering the next big drops in the markets that have happened since then. But let me assure you, it would be a bunch.

That brings me to my second big mistake: a constant desire to tinker with investment types, rather than sticking with index funds. I just can’t seem to keep my hands off my investments, frequently changing styles and directions.

Financial tinkering is like following a compass, only you first follow it north, then south, then west, then east. You know what happens? At best, you’re going to get somewhere, but it’s going to take you a lot longer than just going in one direction all the time. At worst, you aren’t going to make any progress at all, instead ending up where you started or maybe even further from your goal.

I’ve gone from growth funds to value funds to index funds. Sometimes, I’ve been lucky. But for the most part, it was a lot of work for a lot less gain. I should have just gone with a set plan involving index funds. We’d be much richer today if I had.

So, have a safety net of cash to last for a few years, go with index funds, and stay the course through thick and thin. You won’t end up at the bottom of the barrow with Scrambo. You’ll also look a lot smarter than me. But based on my history, that isn’t saying much.

Ken Begley has worked for the IRS and as an accountant, a college director of student financial aid and a newspaper columnist, and he also spent 42 years on active and reserve service with the U.S. Navy and Army. Now retired, Ken likes to spend his time with his family, especially his grandchildren, and as a volunteer with Kentucky’s Marion County Veterans Honor Guard performing last rites at military funerals, including more than 350 during the past three years. Check out Ken’s earlier articles.

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