It scares me to admit I’ve been investing for over 50 years. It’s been a great ride, and fortunately I’m still going strong. One of my investment mantras thru all these years has been Charlie Munger’s quintessential advice: “try to be consistently not stupid.”
We all make investing mistakes, but not all of us learn the appropriate lessons from those mistakes. This blog is less about mistakes and more about lessons. If the investment genie were to offer me a redo on my portfolio management execution from these past decades, here are seven things I would do differently next time around.
- More USA, less international. I know what you’re thinking—what about diversification? But I believe that William O’Neil had it right all along. American ingenuity is where you want to invest. Besides, great American companies do business all over the globe. Microsoft is doing your diversification for you.
- Hot money managers are not worth chasing. I’ve been guilty of this. Sometimes it works, but only if you get in early and don’t overstay to the point when their hot hand inevitably cools — and it will. I have a long list of managers who can claim this crown.
- Keep it simple. Adding complexity or asset classes or different methodologies to your portfolio mix seldom results in outperformance, but we investors will continue to be tempted. Something about human nature wants to seek out complexity. Fight the urge.
- Private equity and hedge funds. Recently, the number of new funds and new money has swollen significantly. I never liked the high fees, long terms and lack of liquidity. There are just too many other sensational stock market options (albeit less sexy for cocktail party discussions.)
- Fees matter. Even small differences matter and will add up over time. Too often, investors pay for the Los Angeles Dodgers and end up getting the Wichita Mudcats.
- Ride those winners! I’ve had five long term holdings that have paid a lot of bills. Hold tight when you find an AMZN, MSFT, COST, V, or MA.
- Investing is the art of man versus markets. The voodoo within investing is how best to control your Investor Self. If you memorize only one of the 10 Essential Stages of Stock Market Mastery from our book, let it be Stage 3—The Investor Self.
Trade well; trade with discipline!
Gatis Roze, MBA, CMT
- Author, “Tensile Trading: The 10 Essential Stages of Stock Market Mastery” (Wiley, 2016)
- Developer of the “Stock Market Mastery” ChartPack for StockCharts members
- Presenter of the best-selling “Tensile Trading” DVD seminar
- Presenter of the “How to Master Your Asset Allocation Profile DVD” seminar
P.S. If you would like to be notified when I post a new Traders Journal blog, please submit your preference via the tile in the right column titled FOLLOW THIS BLOG.
It scares me to admit I’ve been investing for over 50 years. It’s been a great ride, and fortunately I’m still going strong. One of my investment mantras thru all these years has been Charlie Munger’s quintessential advice: “try to be consistently not stupid.”
We all make investing mistakes, but not all of us learn the appropriate lessons from those mistakes. This blog is less about mistakes and more about lessons. If the investment genie were to offer me a redo on my portfolio management execution from these past decades, here are seven things I would do differently next time around.
- More USA, less international. I know what you’re thinking—what about diversification? But I believe that William O’Neil had it right all along. American ingenuity is where you want to invest. Besides, great American companies do business all over the globe. Microsoft is doing your diversification for you.
- Hot money managers are not worth chasing. I’ve been guilty of this. Sometimes it works, but only if you get in early and don’t overstay to the point when their hot hand inevitably cools — and it will. I have a long list of managers who can claim this crown.
- Keep it simple. Adding complexity or asset classes or different methodologies to your portfolio mix seldom results in outperformance, but we investors will continue to be tempted. Something about human nature wants to seek out complexity. Fight the urge.
- Private equity and hedge funds. Recently, the number of new funds and new money has swollen significantly. I never liked the high fees, long terms and lack of liquidity. There are just too many other sensational stock market options (albeit less sexy for cocktail party discussions.)
- Fees matter. Even small differences matter and will add up over time. Too often, investors pay for the Los Angeles Dodgers and end up getting the Wichita Mudcats.
- Ride those winners! I’ve had five long term holdings that have paid a lot of bills. Hold tight when you find an AMZN, MSFT, COST, V, or MA.
- Investing is the art of man versus markets. The voodoo within investing is how best to control your Investor Self. If you memorize only one of the 10 Essential Stages of Stock Market Mastery from our book, let it be Stage 3—The Investor Self.
Trade well; trade with discipline!
Gatis Roze, MBA, CMT
- Author, “Tensile Trading: The 10 Essential Stages of Stock Market Mastery” (Wiley, 2016)
- Developer of the “Stock Market Mastery” ChartPack for StockCharts members
- Presenter of the best-selling “Tensile Trading” DVD seminar
- Presenter of the “How to Master Your Asset Allocation Profile DVD” seminar
P.S. If you would like to be notified when I post a new Traders Journal blog, please submit your preference via the tile in the right column titled FOLLOW THIS BLOG.
