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I’d like to claim that skill, but alas it’s not true. I’m closer to being a saver with patience, but I have little patience with detail. If I was a civil engineer like my son, you would not want to drive over one of my bridges.
I truly admire HD writers who can delve into the nitty gritty of investing and those who understand it all. I’m still wondering what happened to the American Stock Exchange.
I don’t know the difference between a mutual fund and an ETF. I have too large a percentage of my investments in a single stock, but on the other hand it was all granted to me .. as if that matters.
In my twenties I thought I was going to be a savvy investor. I spent lunch hours in a brokers office, I invested in hot tips …and lost accordingly. I even fancied myself a chart investor plotting stock prices and trends on graph paper – not a spreadsheet- in the days before PCs. Plotting took up time and made me feel knowledgeable, but I can’t recall why.
Something Jonathan wrote years ago was the first time I thought about fees of any kind and frankly I still don’t pay much attention.
I understand the concept of diversification- I think, and unlike some of my friends, I know it is not three S&P index funds operated by different investment companies.
The stock market befuddles me to this day, about 65 years since I first dabbled unsuccessfully. Why does a stock go down when its earnings miss analysts estimates? Why do we assume the analyst was right?
More amazing to me is that a stock price rises with the expectation of higher earnings when those earnings may not be shared with the stockholders. I’m told it’s because growing earnings increase the value of the company so other people are willing to pay more because the company will be worth more … and on and on it goes. To me that’s like buying a piece of art for a $1,000,000 only to have it shredded upon sale.
I take pride in knowing I helped Warren Buffet on his way. In my youth I bought Hathaway shirts, but today if Warren looked at my investments he would drop his Dilly Bar.
After getting burned once ($25,000 gone) by investing in something I didn’t understand, I stick to index and bond funds. I do know the difference between municipal bond and other bonds, but even though I have substantial amount in municipal bond funds, I have never done a detailed analysis of tax-free versus taxable interest, I just like the sound of “tax-free” especially when it includes my state taxes. Plus that income offsets the Social Security loss from starting at FRA. 🤑 Where did you hear that before?
Should I care about the VIX? Should I fear the VIX? I read it uses the weighted average of call and put options and strike prices. Now all I need do is try and understand what each of those terms mean. Nah, is there any need?
I look at my accumulated assets – thanks to employer stock and a 401k and think, wow! Not bad for a kid who started working as the lowest paid person in a company of 15,000, albeit 65 years ago. I don’t dwell on how much more it might be if I knew what I was doing investing wise. Besides it’s too late anyway.
I’m off the help Warren again. I fancy a Turtle Pecan Cluster Blizzard.
I love this article, Dick, because my patience with detail is on a par with yours — nonexistent. The difference is that I once still fancied myself a pretty good stock investor despite that character flaw, which means it’s an absolute miracle I didn’t bankrupt myself two or three times over with my inadequately researched, quick-trigger stock buys. I look back at my year-end summaries from two decades ago and see a dozen stocks and funds I can’t even identify, let alone remember buying and selling.
I lost all interest in individual stocks quite abruptly when I got sick. I moved most of what I had into robo-investing vehicles (Wealthfront and Betterment) that my wife could easily understand and could handle comfortably after my departure. And when the departure didn’t happen, I had zero urge to resume my evil ways. Being cured also cured me of active investing. I still have one stock and one active equity fund, but the rest is in the robos.
I am an experienced investor, I analyze companies and buy stocks. If you understand corporate financials, it is not difficult, and the stock market is really very inefficient.
I’ve a long-in-the-tooth degree in business management and ran my own business for many years. During that time, I prepared all the financial statements for filing and have a good understanding of corporate balance sheets and the legal sleight of hand used to polish the numbers. But for me personally, I simply couldn’t be bothered spending my time combing through the data to stock pick. I would guess some would agree with me that a balance sheet can be more of a creative writing project than a portrait of objective truth. Index investing is plenty good enough for me.
That is certainly the case. You have $20 billion in goodwill on your balance sheet? Somehow, I don’t think creditors will take goodwill, they only want cash, unfortunately.
In the absence of dividends and even with them, I can’t understand how financials like EPS or sales matter in the short run (absent heading toward bankruptcy) or why they drive buying or selling of a stock. After all, if there was true logic in it all this who would be buying when others are selling while they both are looking at the same data.
A stock price is essentially just the average of what everyone guesses it’ll be worth tomorrow. Earnings reports don’t give you cash; they’re just vibe-checks to see if a company is outperforming expectations. If it beats the spread, people bet it’ll pump, so they buy. If it misses, they dump it. It’s a hall of mirrors—just betting on other people’s bets. There’s no real logic, only the chaotic guesswork of somewhat civilized apes, so don’t try to find any lol.
I hope to beat the spread when I pull the handle on a slot machine too, The when I get up someone else tries the same machine …
‘’Seems quite similar to the stock market. How can anyone be right another person is willing to buy what you sell?
When you think about it, that’s the whole point of a stock market—it’s a mechanism to match buyers with sellers, not really much different from an auction house. Have you seen some of the rubbish they manage to find buyers for? A share price at any point in time is just like that auction house selling a trinket. The price reflects what someone will pay, not necessarily what it’s “really” worth.
off topic (as usual for me) but your civil engineering mention made me think of one of my favorite old computer science quips: “Weinberg’s Law:If Builders Built Buildings the Way Programmers Wrote Programs, Then the First Woodpecker That Came Along Would Destroy Civilization”
By one definition an investor is“ a person or organization that puts money into financial schemes, property, etc. with the expectation of achieving a profit”
How we go about achieving this is entirely personal. Some purchase a couple of indexes, while others purchase stock in hundreds of different companies.
I’m one of those with a hybrid portfolio comprised of ETFs and individual stocks. About 25 different holdings at present.
One of the issues all investors face is how to manage their “financial scheme” be it stock market investments, bonds, commercial or residential real estate, crypto or whatever. I do think it is very important to be cognizant of one’s ability, aptitude and willingness to achieve success. In other words, operate within one’s limits. Yes, we may stray a bit out on the tiny branches. I never forget my goals.
Note: Never underestimate the industry’s ability to make something overcomplicated. A recent Morningstar article “What Today’s Index ETFs Get Right, and Wrong, for Investors” pointed this out.
Today there are “ 2,000-plus index ETFs on the market” and “Incredibly, index ETFs track over 1,800 different indexes.”
Well, to begin, I had to look up Dilly Bar, which is embarrassing because my favorite of the Buffett snacks is the…… wait for it….. Turtle Pecan Cluster Blizzard. Though in the summer I prefer the Somemores Blizzard, which contributed to my DIET post. And that last sentence in paragraph 10 caused an audible chuckle. You have a pretty good sense of humor for a HR guy.
I’m with you on avoiding deep dives into the markets. A basic knowledge of diversification and low cost investments, along with a tolerance for market gyrations is enough to get me through. The brainiacs leave me in the dust asking, huh? I think for many of the people you describe, investing is like a hobby.
I keep my investing simple too. Index Funds and recently sold a rental property I owned for 25 years. Retirement is 3 years way now, and I’ve already spotted my local DQs in the nearest towns I’ll be living close to. 🙂
I’m now picturing you eyeballing steel beams and saying “eh, close enough” while your son quietly weeps into his engineering drawings lol
As an accidental investor by virtue of being a bit of a nerd, I was going to give you some explanations to your queries, but then I realised I’d just bore the pants off you. Anyone who knows they don’t know the difference between a mutual fund and an ETF is already ahead of half the people who think they do.
As for the VIX—should you care? Probably not. Should you fear it? Only if you enjoy understanding weighted averages of things that don’t actually exist yet. And frankly, anyone who’s spent 65 years befuddled by the stock market yet still comes out ahead has clearly mastered the most important investment strategy: showing up and participating without panicking.
Enjoy your Turtle Pecan Cluster Blizzard, whatever the hack that is!
Hey Mark, I know what mushy peas, a fry up, bangers and mash and colcannon are, get with the program. 👨🏼🍳🎠
From the sound of the concoction, my blood sugar is probably glad I’m not getting with the programme. 🥤
A signature aspect of a Dairy Queen Blizzard is its ability to be turned upside down and not fall out of the cup. It’s basically a cement milkshake.
Unlike the stock market which can turn upside down or have the bottom fall out. 😱
One of the funniest HD comments ever!
A Blizzard is a type of milkshake at a chain called Dairy Queen which is owned by Berkshire Hathaway. A Dilly Bar is ice cream covered in chocolate from the same chain.