Investing and Stuff
It’s pretty darn fascinating to watch the media begin to recover from the shakeout. Not to say this is over; I think we have at least one more “first you say it, then you do it” panic in the wings. Funds managers are about to unload their cash reserves back into equities, which will drive a horrible overreaction from individual investors trying to grab the momentum upward.
The media’s little advice columns are kind of refreshing in a way. They’re kind of on my talking points: dangers of personal leverage, treating debt capacity as savings, etc.
We need to have regulation that changes the name of “home equity loan” to “second mortgage,” the more traditional term if I see things correctly. “Home Equity” implies you’re tapping into something that is yours (like a realized gain on something). “Second Mortgage” implies you are getting further into debt, albeit secured debt. There’s nothing wrong with the loans when used properly and in light of true (emergency) need. But people need to realize that if they consider their home a cash machine, they need to account for the ATM fees.
My own learnings are a bit more theoretical in nature, but they center around the following:
Purchase price averaging: Be level-headed, but stay in the game. Buy slowly and steadily, especially in payroll-deducted investments.
Dividends: You know, those things that aren’t on the stock charts? They make everything slant upward.
Contrarianism: It can go too way far, but when CNBC starts dropping confetti, try to have second thoughts.
Timing: Psychological poison. Try not to march into gunfire, but realize it’s essentially hopeless.
Chasing Performance: By the time a stock or fund’s performance becomes notable, you’ve probably already missed the boat.
Commodity Prices: More tied to currency parity than you would ever think.