I had the opportunity to read two books over the past two weeks.
The First One was ‘The Lazy Person’s Guide to Investing’ by Dr Paul Ferrell, a former investment banker with Morgan Stanley and a columnist later, with some really useful and simple advice for the individual investor.
Here are some excerpts:
“Investing really is very simple stuff. You can do it yourself.”
“Lazy portfolios are keep-it-simple, no-hassle, low-stress, time-saving, low-maintenance portfolios–so you can get on with the business of everyday life.”
“Believing that investing requires some kind of special or weird thinking that you don’t have will blind you to your own natural instincts.”
“The only solution is to be in the market all the time and stop jumping in and out.”
“The more I know, the more I know I just don’t know, and neither does anyone else.”
“Taxes, Time, and Psychology favor the laziest portfolios.”
“The market is totally random, irrational, and unpredictable. And it loves humbling the mighty. Try to beat it and you’ll lose money.”
“Perhaps the single most important lesson you’ll need on the road to becoming a millionaire is frugality.”
“A penny saved is a dollar earned, thanks to compounding.”
“Buy the whole market with index funds, and never sell.”
“Experience has taught me that the relentless noise from breaking news sources, like CNN and CNBC, easily distracts most investors from what really works in the long run.”
“The ideal hybrid fund acts like a whole portfolio, diversifying between stocks and bonds for you.”
“Keep it simple, very simple. Lazy investing works.”
And the other book was ‘The Coffeehouse Investor’ by Bill Schultheis, a former broker with Solomon Smith Barney.
Here are some excerpts from it:
“The first step in being a responsible investor is to calculate an approximate savings goal.”
“We have the misconception that dealing with something so far away means sorting through thousands of mutual funds, hundreds of advisors and dozens of financial magazines.”
“The three fundamental principles of investing: Asset allocation; approximating the stock market average; saving–and these three principles are in our control.”
“As long as Wall Street has a vested interest in lots of transactions and busy portfolios, investors will continue to latch on to the hype and hysteria of Wall Street, perpetuating the misconception that by carefully reviewing market trends, diligently studying mutual fund tables, religiously researching global economies and closely watching interest rates, anyone and everyone can own a successful portfolio.”
“Let go of the mistaken belief that the secret to a successful portfolio is to accurately forecast bull and bear markets.”
“I know of no other industry in which so many self-proclaimed experts try so hard to convince us that they are wildly successful at that which they so miserably fail.”
“The most important factor when diversifying is to adhere to your asset allocation strategy, because when you stick to your strategy and rebalance your asset at year-end, buy and sell decisions are no longer arbitrary.”
“Maybe if mutual fund companies sent a bill each month, more investors would take the time to see whether they were getting their money’s worth.”
“Somewhere along the line Wall Street has forgotten that we can retire and be happy on a little less than millions and millions of dollars.”
“Strike a balance.–It is not worth making our life miserable today so you can retire in style tomorrow.”
“When we simplify investing, we take another step toward discovering our contagious spirit and our unique energy in such a way that we impact our world, making this a better place for everyone. I suspect that’s what most of us would say life’s all about.”
Some wonderful, honest and wise words indeed!