The Biggest University

The great recession hit in 2008.  I like many others watched as the financial markets eroded.  Fortunately, I didn’t experience the entire fallout like so many others did, but it was an eye opening experience for me.  I thought I knew enough about investing from my Smith Barney training whereas I would know what to do in times like this. I didn’t.  I realized at that time that everything I had been told, or had read wasn’t good enough. I decided that if this ever happened again I was going to be in a better place to take advantage of it.  So I laid out a plan to do so.

No university was going to get me the information I needed or the access to the best of the best.  I realized the only way to find out what the best knew was to read as much as I could about them, or even better what they had written.  I laid out a plan to read one book per month. In the end my reading accelerated beyond one book a month where I was reading three books in a month sometimes.  I read everyone that I thought had good information. I read the great books of all time. The ones Buffett and many great investors recommended. I listened to interviews.  I signed up for newspapers such as IBD. Today, I still continue to read. It’s getting harder to find new books, so I find myself going back to reread some past favorites.  

This last ten years of reading has opened my eyes to the reality of making investments in businesses and those that are successful.  It is not hard, but there is so much crap out there that is constantly in our faces, since the media sensationalizes anything it can to make money in order to please it’s advertisers.  A lot of the conclusions I’ve arrived at over the last years of reading is posted on this blog. The good thing is, because of the internet, people are getting smarter. Great investors like Buffett, Bogle, and many others have used the media to present the facts, so that people can make informed decisions.  Jim Kramer on CNBC has helped to give investors access to CEOs on his shows, so they can get a small understanding of who they are and what they think.

My research has led to a few important facts.  One, is you have to know the market’s history. It is a history of capitalism, and the process of events in the past will help you to understand how to handle future events that occur.  Two, when investing only work with ideas that have long term proven success that others have used. The most obvious of these ideas is value investing that Warren Buffett, Charlie Munger, Walter Schloss, Stan Perlmeter, Tom Knapp, Ed Anderson, Bill Ruane, and many modern investors such as Monish Pabrai, and Joel Greenblatt as examples work from, and was formulated by Benjamin Graham.  It is a more active strategy and disregards the market in most instances. Then there’s the passive strategy of index investing popularized by John Bogle. It uses diversified indexing and annual re-balancing to help returns. Both of these strategies have long term proven successes that you can find documented. There are other strategies which have documented back testing research as well.  Bottom line here is don’t take someone’s opinion for granted. Make sure there is proof.

Life gets in the way of what we would like to ultimately do sometimes, but it doesn’t have to.  Take the time to learn and change your life and your world for the better. The biggest university in the world is books that have been written and you can find them online.  Today, you can listen to them. Change starts with your philosophy, attitude, and then actions. Make the choice to just go.

Good investing.