I’ve been learning investing lessons since I was a kid. Here are a few investing lessons that stuck.
Investing Lesson 1
In the early nineties I trained with Smith Barney back in Hartford, Connecticut. One morning I arrived at class early. Two of the instructors were talking with a student and were joking about how those working on Wall Street referred to us Financial Consultant’s (FC’s) as “mushrooms.” Mushrooms in the sense that the major firms kept their FC’s in the dark and fed them a bunch of sh*t.
After my training I realized just how right they were. Financial Consultant’s despite the name were seen as an asset gatherer even though they would continually tell us that we knew more than the average investor. Good thing for a guy named Charles Schwab who made them eat their own sh*t.
Investing Lesson 2
During the great recession of 2008 I watched as astute professional investors capitalized on the opportunity while the average investor just hung on and drowned with worry. It proved just how inadequate the investment industry can be. Great investors spend their time researching and patiently waiting for investment opportunities to develop. Like a seven year old at the community pool the average investor is usually swimming full time since it’s open all the time. There’s even a lifeguard with a suit and tie at the community pool.
Investing Lesson 3
Successful investing requires work, and is more than picking a stock because it is liked. Gambling is one of the hardest habits to break, and investing without proper technique is gambling. Good investing is a long term proposition of understanding a business or strategy you like. For example most wouldn’t buy a pizza shop with the intent of selling it the next year, since it takes time to establish or change a business, yet in the stock market this happens all the time due to the liquidity of the markets. Pizza pizza.
Investing Lesson 4
Proper money handling is a learned skill. If you want to be good at golf you have to spend time studying and practicing it. The best golfers spend everyday learning, practicing, and playing. The same holds true with learning how to budget, save, and invest money. Nobody is born as a CPA with a calculator in their hands.
Start your investing knowledge with 7 Skillful Steps for Investing Beginners.