General Information and Analysis
Zeb's comment: This is fine sentiment, and I wish we would
practice more kindness. Investment Banks
have no "kindness" toward humanity. Individuals (rare they may be) in
investment banks may show kindness, but not in my experience of 20 years
working for them directly. The banks certainly have no kindness intended to any
of their competitors (you if you are an investor).
Worse, the sitcoms and soap-operas
show very little kindness shown to each other.
I was watching Dr. Robert Sapolsky's talk at California Academy of
Science last night. https://www.youtube.com/watch?v=YWZAL64E0DI (Excellent presentation on his research into
primates and human neurology. I highly
recommend the presentation). On empathy
and sympathy, Dr. Sapolsky made an observation on Chimpanzees. They show empathy and kindness, and while
they also show the ability to attack those outside their social group, they
show more empathy and kindness (through grooming) than humans do to victims of
violent crimes.
Once in a while on TV while
watching NFL Football, you will observe that even football players show empathy
and support for a fallen warrior (from both sides). Given, that is a good thing (I think), most
of the games are "chippy", where if the violence was enough in the
game, the players create their own violence against the opposition - hoping
sometimes, I think, to get a star player thrown out or worse hurt badly through
illegal play.
Generally, kindness seems to be a
lost act. Would you like your day to be
better and less stressful? Practice
kindness on your enemy (or enemies). Of
course, in the heat of battle, you won't do so, but I will continue to practice
every morning and every moment I think about it Kindness.
Thanks Shakespeare...
What Can I Share with you, That Would Make a Difference?
Every morning I think how I might
share with the world (and people I love specifically) the little I know that
may improve their financial life. In
years past, I published in magazines and technical research articles, ideas on
how to improve computer engineering, computer science, and information systems
architecture. Those efforts were aimed
at a very limited subset of human beings.
Near the end of my career in
Computers, I took graduate classes in Economics, in order to expand my
horizon. I had a boss (a PhD in
Mathematics) who listened to me and shared a kindness. He explained that I was never going get a PhD
in economics, and that I should focus on information systems, investments and
computer architecture that supported on-line real time event processing. Did you ever get kicked in the gut?
From that experience, I learned to look for kindness everywhere,
and through the effort of finding it, I learned to try (very hard) to practice
kindness in all areas of life.
I share with you every morning my
distillation of short-term market direction.
I also suggest every morning that prices on a daily basis are pretty
much random. Maybe I'm not so clear in
informing you that there are trends in every asset class (including stocks)
over the long term (even short term if you are very disciplined and QUICK). Those trends are the only way your asset can
appreciate?
Assertion: You must have 3 things
to increase your capital: 1. Volatility, 2. Trend 3. (most importantly) an
investment plan.
Assertion: Very few people have
the discipline over many years to manage their 401K, IRA, and other retirement
investment accounts.
I share this because it took 50
years of learning how to invest so that I would have a retirement account. I made many mistakes - and possibly the most
important of those mistakes (not the big losses) were an accumulation of small
mistakes - not large mistakes. Most of my
mistakes are now well documented in Behavioral Finance and Behavioral
Economics.
So I dedicated my life to helping
the young people that could be helped.
Sadly, most cannot hear, cannot see, and cannot internalize the things that
would make them be able to manage their lives and finances so that they would
not have to depend on the USA government (or France, or Labor Unions and
especially not on investment advisors) to make their retirement comfortable.
Personal Finance (as far as I can
determine) is a work of a lifetime. The
situations world-wide change (politically, resource allocation, war, and so-on)
constantly, and the asset markets seem pretty chaotic in response.
Yet, every person whose mind has
not been damaged by disease (including very old age) can learn to invest in
assets such that it takes little time from their daily living, and minimizes
risk to their capital. Then why are
there not more successful retail investors?
I believe the reader of this
essay, would find a good deal of the reasons in Behavioral Economics. It is all the conflicting human emotions that
cause them problems.
Wow... for example, the stock market
skyrocketed in 2013, but all that political stuff in Congress and the White
House kept us from investing. One of the
best books I've ever read was the "The Black Swan". http://www.amazon.com/Black-Swan-Improbable-Robustness-Fragility/dp/081297381X/ref=sr_1_1?s=books&ie=UTF8&qid=1389024287&sr=1-1&keywords=black+swan
Why that book? Because it deals with investment risk, and
cautions the reader (over and over) in not to listen to the news. It also offers tools to navigate and exploit
a world fraught with an increase in violent Black Swan events.
None-the-less, for those that are
just getting started with a new year goal of investing with discipline, they
should start with the basics. The best
book I ever found (and I read many beginner guides) is "The Richest Man in
Babylon" by George S. Clason. The
book is for beginners, but few even of the wisest men follow the advice completely,
because it takes a life time to overcome our natural inclinations (or so I
believe that is the reason).
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