Investing Lessons From Paul Merriman

Paul Merriman’s latest article at MarketWatch was titled The 12 Best Retirement Investing Lessons. A couple stood out as being especially useful. Three: I have learned to focus on the things I can control and leave the rest to play out, as they certainly will, in an unknown future. What can I control? Expenses, taxes, turnover costs, diversification, asset class selection, to name a few. Most of the rest of what the media focuses on is only noise. I can also control (to some degree, at least) my emotions and my expectations and my discipline. I have learned that it’s extremely worthwhile for me to do so.                                           This is one I have talked about a lot. You have a much better chance of controlling your savings rate, spending habits and not succumbing to emotion. Any investor will endure periods where the market does well, periods where the market does poorly, periods where their investment performance is relatively good, periods where their investment performance is relatively poor and any combination of the above.  Seven…Instead, focus on the potential loss you could face if things don’t go as you expect. For example, any individual stock can lose most or all of its value, regardless of how good the “story” is regarding its products or management. A diversified stock fund, on the other hand, has an expected loss of only 50%. This is a tie in with to the idea of people feeling losses far more than they feel gains. The...

Investing Lessons From Paul Merriman

Paul Merriman’s latest article at MarketWatch was titled The 12 Best Retirement Investing Lessons. A couple stood out as being especially useful. Three: I have learned to focus on the things I can control and leave the rest to play out, as they certainly will, in an unknown future. What can I control? Expenses, taxes, turnover costs, diversification, asset class selection, to name a few. Most of the rest of what the media focuses on is only noise. I can also control (to some degree, at least) my emotions and my expectations and my discipline. I have learned that it’s extremely worthwhile for me to do so.                                           This is one I have talked about a lot. You have a much better chance of controlling your savings rate, spending habits and not succumbing to emotion. Any investor will endure periods where the market does well, periods where the market does poorly, periods where their investment performance is relatively good, periods where their investment performance is relatively poor and any combination of the above.  Seven…Instead, focus on the potential loss you could face if things don’t go as you expect. For example, any individual stock can lose most or all of its value, regardless of how good the “story” is regarding its products or management. A diversified stock fund, on the other hand, has an expected loss of only 50%. This is a tie in with to the idea of people feeling losses far more than they feel gains. The...

A Reader Asks, I Answer

Yesterday I put up a post titled What Is Your Contingency Plan that was about figuring ways to supplement income either in retirement or in the face of some sort of change in your employment situation. I think this is very important as I have have been displaced a coupe of times and although in both instances (2001 and late 2003 into early 2004) things worked out quickly that kind of luck can never be taken for granted. A reader reasonably asked whether I get paid anything for firefighting. Maybe this was really asking if I walk the walk on this, or maybe not but for anyone who is interested… We all evolve and part of evolving can be the decision to get involved volunteering with something that is presumably of interest. When I joined our volunteer department my interest was trying to be part of the solution to protect our house from a wildfire. The more involved I got, the more involved I wanted to be. The work is challenging, it offers the opportunity to help people and it is much different than anything else I have ever done. After ten years it is still very enjoyable and any pay has has been very small (several hundred dollars ten years ago). In posts like the one yesterday I talk about figuring out how to monetize something you would otherwise be willing to do for free. I am willing to be involved with the fire department for free but there are ways monetize my involvement through extra training and availability for certain tasks. For now, our department does not...

A Reader Asks, I Answer

Yesterday I put up a post titled What Is Your Contingency Plan that was about figuring ways to supplement income either in retirement or in the face of some sort of change in your employment situation. I think this is very important as I have have been displaced a coupe of times and although in both instances (2001 and late 2003 into early 2004) things worked out quickly that kind of luck can never be taken for granted. A reader reasonably asked whether I get paid anything for firefighting. Maybe this was really asking if I walk the walk on this, or maybe not but for anyone who is interested… We all evolve and part of evolving can be the decision to get involved volunteering with something that is presumably of interest. When I joined our volunteer department my interest was trying to be part of the solution to protect our house from a wildfire. The more involved I got, the more involved I wanted to be. The work is challenging, it offers the opportunity to help people and it is much different than anything else I have ever done. After ten years it is still very enjoyable and any pay has has been very small (several hundred dollars ten years ago). In posts like the one yesterday I talk about figuring out how to monetize something you would otherwise be willing to do for free. I am willing to be involved with the fire department for free but there are ways monetize my involvement through extra training and availability for certain tasks. For now, our department does not...

What Is Your Contingency Plan?

The WSJ had a fun article titled Think You Can Drive a Bulldozer?. It recounted the experience of the article’s author trying to operate a dozer. They are apparently much easier to operate than they used to be incorporating technical innovation like almost everything else. Despite they’re being relatively easier to operate there is a shortage of qualified operators. The article did not offer an information about where to get training on heavy equipment operation but it is not like it takes two years of classroom time. By coincidence I have been writing about operating heavy equipment for years by virtue of my neighbor with his backhoe and the extent to which he supplemented is retirement income with jobs around the area. The way the economy is evolving many people with white collar careers may find themselves needing to completely reinvent themselves. That last sentence was written in a forward looking tense but of course this has been going on already since 2000 so the assertion is that the need to reinvent will touch more people. I view this as a fallback concept that won’t replace 100% of income but could fill in a decent portion of any income gap that could arise from your job being eliminated. Like with anything in life the more you put in to reinventing yourself the more you could potentially get out of it. It stands to reason that training that takes months will pay more than something that takes a couple of weeks. My neighbor with the backhoe charged $60/hour but he owned the backhoe. This is also where living below your...