Saturday, April 21, 2012

The magic ingredient...

Do anything for almost 28 years (my professional tenure), and you will consider yourself an expert... And indeed, I see myself as such in the following...

In investor nature...

In how not to invest...

In spotting charlatans...

In the lessons of randomness...

Of all the folks I've counseled over the years, there is a special group of individuals who, as a result of a beautiful (in retrospect) experience prior to our introduction, have discovered investing's Holy Grail - financial peace of mind... They would be the tech-investors of the final days of the last century...

My letter to the investor of 1999...

Dear Friend,

You are most-blessed among the people I counsel... You were baptized by the fire of the tech bubble inferno... Having watched, in horror, your dotcom-rich portfolio take a (then) once in a generation hit, for all the years since, prudence has found its place in your heart...Your home, your cars and your vacations are paid for... Your portfolio, while yet 60% in equities, is an impressive potpourri of securities of all shapes, sizes, domiciles and sectors... Yes my dear friend, diversified you are...

Without having experienced the aftermath of your over-indulgence to tech in December of 1999, you might have maxed on mortgage-backed securities and real estate investment trusts by October 2007... And, perhaps even worse, you might very well be $600,000 into a $250,000 home, pondering the unthinkable; the skipping of a few mortgage payments in hopes of inclusion in the next government vote-buying, I mean mortgage-rescue, program...

Today, aside from the peace of a pristine balance sheet, you rest in the knowledge that you'll never again fall prey to a prognosticator... The gurus of the '90s, their genius having, in the span of three short years, failed them (and, alas, their followers), are long gone... And you, knowing the ravages of randomness, can spot today's incarnation of the Pied-Piper thousands of miles away (they come from universities the worldwide these days)...

Yes, there is indeed a magic ingredient to the investment process (humility) that only a fortunate few have discovered... Congratulations my friend...

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