It seems fitting that this initial blog post comes from the first time I wrote on the subject in the San Mateo Times on January 17, 1994.
COMMON SENSE BEST ADVICE WHEN IT COMES TO INVESTING
A few years ago I came across a humor book called "Momilies," a collection of funny advice and admonitions from mothers to their children.
The classic was, "If you fall out of that tree and break your leg, don't come running to me."
I was reminded of the book while thinking that some of the best advice about investing (and life as well) can be derived from the proverbs learned at your mother's knee. This opinion relies upon the sometimes radical notion that there is a direct correlation between successful investing and common sense.
You don't get something for nothing. One of the most valuable pieces of advice that we must perennially relearn, this warning is as difficult to follow in adulthood as it was when we were kids.
Ignorance of this basic truth is what makes us believe that we can invest in something with an impressive rate of return without risking a good portion of our capital.
Look both ways before crossing the street (also see act in haste, repent at leisure) is the basis for "investigate before you invest."
Over the years I could have saved a lot of money by checking out those hot tips and last-minute opportunities that fortune (both good and bad) dropped into my lap.
Don't be selfish, share is good investment advice, particularly when your stock price has appreciated far in excess of what you could reasonably expect. Maybe it's time to sell the stock to someone else and allow them to share in future profit (and risks).
Education is important (better known as Do your homework!)
In investing, as in life, what you don't know is far more likely to hurt you than what you do know.
You can't be successful over the long run just by buying stocks recommended in financial magazines and on television shows. You have to learn the basics about securities and securities markets.
How many hours a week do you spend really studying investments and markets (and not just looking up prices or reading Alan Abelson)? At what price is your stock a buy and at what price is it a sell? And just how did you calculate those prices?
There are many others: If it seems too good to be true ..., A stitch in time ... (i.e., cut your losses), Save for a rainy day ..., Life is not fair ... (e.g., bad things can happen to good stocks), not to mention the one which all professionals use to describe the virtues of diversification: Don't put all your eggs in one basket.
And anyone who has had a poor investment experience dealing with someone they didn't check out beforehand can appreciate: Don't talk to strangers.
But my favorite expression should be the motto of all contrarian investors - particularly now, when everyone is certain that this stock market is different and that trees can grow to the sky.
This is the cliché which every parent has, at one time or another, sworn never to use but, when pushed to the wall by exasperation and emotion, will use nevertheless: If all of your friends wanted to jump off the Golden Gate Bridge, would you want to do it too?
Unfortunately, as far as investing goes, our response today is likely to be the same one we defiantly threw back at our parents so many years ago.