All the world will be looking at Beijing today; but what they should be watching is the athletes.
With all the news about the politics, pollution, and public relations associated the Beijing Olympics, what seems to have been lost is the years and years of preparation that thousands of athletes have undertaken. I’m getting pretty sick of the phrase, “coming out party.” I thought the Olympics were about the competition.
But what we can learn from these athletes is significant. Character qualities of determination, perseverance, and poise under pressure are directly applicable to the investing world. And that’s lesson #3: successful investing is about you—your goals and the discipline to reach those goals. Just as an Olympic athlete must train even in adverse conditions, the successful investor needs to stick to his disciplines, even when times get tough.
Because (with apologies to Vince Lombardi) those are the times when our investments can really get going.
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Successful Investing (Part 3) [0:57m]:
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The world was supposed to end. The oil companies were all in cahoots. Oil prices only go one way, right? Well it didn’t work out that way.
Oil prices have fallen almost 20%. This implies that gas prices should fall to about $3.50 a gallon and heating oil to about $4. While that’s still above where they were last winter, it’s hardly the Energy Armageddon that many feared.
Why did oil come tumbling down? Inventories. When something’s priced too high, too much is produced and not enough is consumed–so inventories go up. The last couple of reports show inventories growing more than expected.
Now over the next couple of weeks market gurus will fret and fuss over whether lower oil prices are a good thing. After all, if they’re a sign that the economy is failing, that might be bad. Don’t worry. Lower oil prices are good. More money to consumers and lower energy prices are here just in time for winter.
The world has a funny way of not ending. Seeing oil prices come off their unsustainable highs just reinforces this truth.
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gmu080807
Wednesday, August 6, 2008
Once we have something to invest, what do we do?
The second principle of successful investing is to have a goal for your investments. While this may seem obvious—after all, we invest to make money—it’s not always clear what kind of money we want to make.
Income? Before or after taxes? Capital appreciation? Some combination? Usually, we need to have a goal for the money. Then we can plan our investments to meet that goal. So, for example, if you’re 30-something and saving for retirement in a 401(k), you probably want the greatest total return you can get, and you can handle some volatility. The older we get, the less risk most investors take.
It’s been said that if you don’t have a target, you’ll hit it every time. Having a goal and a plan to meet that goal is the next step to investing success.
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Successful Investing (Part 2) [0:54m]:
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