Getting Rich Slowly

We made it safe and sound and the market rallied nicely while we were sleeping on the plane. So far so good driving on the wrong side of the road. NZ is beautiful. I worked on the following piece right before we left.

As I start to wind down into our New Zealand adventure I thought I would do a write up on investment philosophy. I have a lot of new readers (insert smile) and it has been a while since I have put up this kind of post.

Tools like ETFs, CEFs and other products allow investors to capture different parts of the market. Depending on what is trying to be captured a product might be the best way to go or maybe a stock or something else.

The thing that matters is having some sort of investment plan and method that you can be disciplined with but also be adaptable. There is a balance here that must be learned.

A little bit of discipline and a willingness to continue to learn will keep you fairly close to the market’s returns over longer periods of time. The more learning you are able to do the more value you should be able to add to your own portfolio over time.

If you are a long term investor, as opposed to a short term trader I would advise thinking about the market a place to get rich slowly. This means maintaining diversification, realizing that changes will need to be made every now and then, you will have years where you lose money and you will always hear about someone doing better in the market than you.

Something I have written about many times is the idea of being wrong. If you know that in a diversified portfolio you will have some stocks that don’t work the way you thought, you will be less likely to lose sleep.

Here, I am not necessarily referring to a stock that goes down. Over the last week or two just about every oil stock I know is down. Conoco Phillips has dropped 11% in the ten days. That certainly is too bad if you bought it ten days ago but that drop does not stand out at all compared to other oil stocks. It is hard to imagine that anyone that did buy COP ten days ago would have thought well if the group goes down COP won’t. Or if an investor bought Oracle a year ago as a proxy for big tech they might not be thrilled with being flat after twelve months but that is where big tech is, flat.

However if a different investor bought Oracle for a trade based on a specific catalyst, the stock should be sold after the event whether it works or not. I have to admit I do not do much of this. One that comes to mind was buying Greek phone stock Hellenic Telecom (OTE) in 2003 because I thought Greek stocks might get a lift from the Olympics.

Our personal accounts are structured in such a way that we have a lot of foreign, a lot of yield and very little beta. I would expect this type of mix to outperform a dull market and badly lag the next 25% up year. The reason for this is emotional involvement with my own account will not help me be a better money manager. I do better when I am not emotionally involved.

Regardless of anything, else I have what is right for me. You need what is right for you.

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  1. The Joy Of Portfolio Boredom | AlphaBaskets - […] very important building block of long term investment success. Ten years ago I wrote a post called Getting Rich…

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