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funny, the difference in our philosophy, i beileve history doesnt teach us anything about the future. it only shows us what didnt work in the past.
i always say when it comes to investing, history never repeats itself 2x the same way. the only thing that repeats itself is historians.
its been my experience that the same scenerios always always play out just different enough that any planning you did based on last time goes right out the window. first iraq invasion stocks plummet the next day. 2nd iraq invasion stocks sore next day. recession of early 2000 gold tanks.. recession of 2008-2009 gold soars , buy a home they only go up , etc.
things change,patterns change just as soon as its your money you plunked down. thats my first rule of investing.
thats what makes investing so difficult when you try to drive and look in the rearview mirror.
biggest example is retirement income calculators. based on as much as 100 years of historical data everyone had a 90% chance of survival with a 50/50 mix and 4% withdrawl rate. well this past decade and even now we are living through that 10% failure rate making all the planners useless for now.
blocks of 30 year time frames in the trinity study and firecalc always held true , until now when im thinking of retiring early lol.....
its all the black swans and combinations of black swans that change things just enough to get ya based on last time!
Last edited by mathjak107; 04-14-2011 at 03:50 AM..
funny, the difference in our philosophy, i beileve history doesnt teach us anything about the future. it only shows us what didnt work in the past.
i always say when it comes to investing, history never repeats itself 2x the same way. the only thing that repeats itself is historians.
its been my experience that the same scenerios always always play out just different enough that any planning you did based on last time goes right out the window. first iraq invasion stocks plummet the next day. 2nd iraq invasion stocks sore next day. recession of early 2000 gold tanks.. recession of 2008-2009 gold soars , buy a home they only go up , etc.
things change,patterns change just as soon as its your money you plunked down. thats my first rule of investing.
thats what makes investing so difficult when you try to drive and look in the rearview mirror.
biggest example is retirement income calculators. based on as much as 100 years of historical data everyone had a 90% chance of survival with a 50/50 mix and 4% withdrawl rate. well this past decade and even now we are living through that 10% failure rate making all the planners useless for now.
blocks of 30 year time frames in the trinity study and firecalc always held true , until now when im thinking of retiring early lol.....
its all the black swans and combinations of black swans that change things just enough to get ya based on last time!
Its true about black swans and other exogenous events. But I think history teaches investors an enormous amount. It's the people that *don't* listen to history that get hurt.
-Look at the dot com craze from 1996 to 2000. Everyone thought it was different, new economy, the rules are different. The internet will change everything.
Similar to.....automakers in the turn of the century? There use to be hundreds of car companies. Similar with refrigeration, radio. Airlines. It's never *different* this time. Just because something is exciting, doesn't mean it will be profitable, or that it will make a good investment. People have forgotten that lesson.
-2nd. Things are always changing. Read about companies in the 50's. Then look at the late 60's or 70's. The landscape competely changed. Something to think about when you're buying X company, and they're going to have a lock on the market for 15 or 20 years.
Companies get discarded, quicker than investors realize. Investors have very short memories. What was hot in the early 50's? No one knows now. Bethlehem Steel use to be the equivilant of Cisco or Walmart. I don't think any amount of productivity or changes in technology can change a companies lifecycle. Or management techniques.
-History never repeats itself exactly, but there are clues. Look at this latest crash. People thought it couldn't happen again. We learned our lessons. Etc. Not true.
History makes me leery of buying google or apple now. They're good companies. But, are you buying Xerox or Bethlehem Steel in 1965. In 20 years, google and apple won't be the same. With many companies, you pay multiples that assume infinite growth, or close.
I think history is like seeing road wrecks. The road wrecks for the next 10 miles won't be exactly the same, but the causes are similar or related. I think what strikes me is how quickly things change. The entire environment changes. The cost of money. Interest rates. Buying now assuming things will stay the same forever is folly.
Human nature doesn't change. People keep making the same mistakes. The mistakes can get magnified.
-Motley fool... I read it but I think its news stories are bogus, and don't believe the stock ratings by people (if you notice, they are all rated positively)
-Yahoo Finance (news stories good), some OK analysis
-Charles Schwab news and analysis of stocks/funds/bonds... CS has some VERY good breakdowns and simple explanations of their ratings of stocks/funds/bonds
I pay for Fortune magazine, I don't know why though... I think I'll switch to "Smart Money" or similar life advice magazine. Anyone have any recommendations for a magazine I can pay for that specializes in investing/savings/advice...etc?
I also read investment books-- lots probably available at your local library for free
Oh and I think Penny stocks are terrible. I don't define penny stocks as <$5 like fool either-- I define them as less than $1. There are some good $1 - 5 stocks.
Very off topic, but figured I'd ask here... Does anyone have a brokerage account that is tied to a savings account which they offer interest and instant transfers? I'm still using Sharebuilder do about 5-10 trades a year and am sick of the $10 per trade, plus the obscene amount for trades above 1000 shares
No, but you can link it from your brokerage to savings/checking.
Use Tradeking, its the cheapest, only $4.95 per trade.
"The best way to think about investments, is to be alone in a room and just think. If that doesn't do it, nothing else will".
Read books about the 1940's or 60's. There are hundreds of companies that are no longer in business anymore. This stock era that we're in, is pretty much a facade. We think it's "different" (we're more sophisticated, smarter, have access to better information, etc). But not really.
There have always been growth industries....railroads, airlines, cars, etc. I think the danger now with the internet and almost unlimited free information....is you can get more evidence to back up your convictions. Just go online, and see 50,000 other people that think the way you do. But industries stall, die, change.
To be a better investor, read history. Not free websites.
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