Ten years ago today the first Investnotes was sent by email to a handful of family and friends. In 2010 my good friend Rob Simons gave me a WordPress blog site, set-up and ready to go, as a birthday gift. There has since been over 400 postings on investing, jazz and art.
Here for all to see are my missteps, misguided trades and boneheaded commentary. But also a few solid suggestions and nuanced observations that when embraced by readers delivered real value for the time spent reading these musings.
Thank you for choosing to join me on this journey of discovery, as well as for your many comments both good and justly critical. Below is the first missive to appear as what is now Invest-Notes. Leaving this post unedited has been the most difficult task of the last ten years.
Investing is not a zero-sum game. All the talk about “beating” the averages serves only to distract from the point, which is to generate a meaningful return on your investments while minimizing any risk of significant loss. What someone else makes is irrelevant as long as you can achieve the goals you’ve set based on your needs and circumstances. You don’t have to “beat” anything over time to create wealth. It is also a fallacy that someone else must lose money for you to profit. So what that someone sells you a stock that then goes up. What if that investor had been holding the stock for years and finally cashed-in for big, long-term capital gains? In this scenario one person has exited a position profitably as another enters the same position favorably.
In his otherwise excellent new book “A Demon of Our Own Design” Richard Bookstaber makes the assertion that when hedge funds win, it is because someone else loses. But he then contradicts himself during a fascinating discussion about the primary purpose of the market being to provide liquidity. Equities, for example, are bought and sold not because of economic news (the Efficient Market Hypothesis), but because someone needs money to take a vacation or buy a new home. Conversely, investment firms and mutual funds receive money that must be invested in a timely fashion. This idea of the market as an entity intended to monetize investments means that as long as the reasons for ownership of an equity are influenced by matters not pertaining to the business of the enterprise then it is impossible to assume that an investor has either won or lost in any given transaction.
Whatever your financial goals, follow your own instincts, not those of people who might view the world differently than you do. And don’t get distracted by what other people claim to be achieving. The only thing that really matters is the value of your assets when you need them.