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The 13 Characteristics of a Good Investor
06-15-2021, 01:52 PM
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#1
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2008
Location: NC
Posts: 21,148
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The 13 Characteristics of a Good Investor
I shamelessly stole this from Bogleheads. Though there's nothing new that hasn't been shared here before, I thought some here might enjoy this 3 page summary of personal financial planning (link below).
The exec summary (with the essential fundamentals that are hardest to teach IME):
- Have a plan.
- Shun complexity and embrace simplicity.
- "Unfortunately, too many financial professionals make investing more complicated than necessary. Perhaps this is because complexity can act as a smokescreen that hides an advisor's lack of experience, confidence, or perspective." [IMO too many "financial professionals" go to great lengths to make clients think they can't possibly invest successfully themselves - and it works on most people, but it doesn't have to be true]
- Diversification in and among asset classes is the cornerstone of good portfolio design.
- Be content with market equaling returns.
- Most stocks under perform the market.
- Understand the function of bonds in your portfolio.
- "If you seek greater return [than from bonds], don’t lower the credit quality of the bonds in your portfolio, increase your allocation to stocks."
- Investor behavior, not investment performance, determines long-term results.
- "Most investors are doomed to fail because in investing, temperament is more important than intellect. Studies reveal that the average investor receives only a fraction of the stock market’s long-term return because of emotional biases that lead to poor investment decisions." [As W Bernstein found out post 2008, even with his sophisticated wealthy clients]
- Don't chase past performance.
- Slow and steady wins the race.
- Shun market timing like Superman shunned kryptonite.
- "Sitting on your hands and not panicking when stocks are declining has proven to be one of the best, and most difficult, investment strategies."
- Ignore all stock market predictions.
- Ignore the daily noise on Wall Street.
- Ignore your neighbors.
"In the end, investing is nothing more than trying to take advantage of probabilities. Prudent financial planning focuses on things as they are today, the most likely scenario for tomorrow and is flexible enough to accommodate changing circumstances. The best way to do this is to implement strategies and investment principles that have stood the test of time. Keep a long-term focus, minimize expenses and taxes, control your emotions, maximize diversification, and stick with your plan. Once you embrace these simple truths you can ignore Wall Street, delete the stock market app from your cellphone and get on with your life."
https://oncoursefp.com/images/Vector...21%20final.pdf
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No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57
Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
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06-15-2021, 08:25 PM
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#2
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Recycles dryer sheets
Join Date: Dec 2020
Posts: 151
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Thanks, nice summary. My own version is keep it simple, don’t get greedy, and don’t get scared.
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06-15-2021, 10:56 PM
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#3
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gone traveling
Join Date: Dec 2018
Posts: 1,196
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Vanguard Index funds and stay the course
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06-16-2021, 03:33 AM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Location: On a hill in the Pine Barrens
Posts: 9,669
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I heard that 13 is an unlucky number.
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06-16-2021, 03:42 AM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Posts: 12,566
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"Be content with market equaling returns."
Hardest for those who love bragging rights.
Which does not include me.
__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success – to be able to spend your life in your own way.’ Christopher Morley.
Even a blind clock finds an acorn twice a day.
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06-16-2021, 05:12 AM
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#6
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Thinks s/he gets paid by the post
Join Date: Mar 2015
Location: philly
Posts: 1,219
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That probably translate as good advice for much of our lives
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My darling girl, when are you going to realize that being "normal" is not necessarily a virtue? it sometimes rather denotes a lack of courage~Aunt Francis
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06-16-2021, 05:59 AM
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#7
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2016
Posts: 9,373
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Those 13 commandments, would of been nice to have 45 years ago when I started out investing.
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06-16-2021, 08:20 AM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2017
Location: City
Posts: 10,308
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Quote:
Originally Posted by Midpack
... delete the stock market app from your cellphone ...
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They have apps for that? Why?
__________________
Ignoramus et ignorabimus
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06-16-2021, 08:26 AM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 37,931
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I like the shun complexity and embrace simplicity advice. That’s a huge deal IMO.
I wish I had figured that out sooner. I’m cleaning up where I can now, 20 years later. Hopefully by our 80s it will be super simple.
Otherwise I did very well on that list from the start of building my retirement portfolio.
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Retired since summer 1999.
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06-16-2021, 08:30 AM
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#10
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gone traveling
Join Date: Jun 2008
Posts: 424
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Quote:
Originally Posted by street
Those 13 commandments, would of been nice to have 45 years ago when I started out investing.
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I recall Harvy Pitt(2001-2003 S.E.C chairman pushed out for his transparency) commenting the 10 commandments only took 2 tablets, and one would surfice vs. something akin to the SEC's 11,000 page policies, regulations, & guidlines puzzled him immensely.
(sarcasm on his part, documented in AMZNs 'Ghost exchange' presentation.
As an aside in contemporanous info a BH's prolific poster pointed out VGs recent papered observations were concluded as :
In Conclusion:
Income-focused investors face increased difficulties in effectively meeting their spending target over time in the current low-yield environment. Low yields on traditional assets can tempt income investors to stretch for yield through a reallocation of the portfolio into assets with higher yields or dividends.
The unintended consequences of this are less diversification and risk that materializes when markets are under stress. The solution is a total-return approach, which, when coupled with a prudent spending rule, gives investors a chance to meet their goals through stable portfolio withdrawals, tax efficiency, and a diversified portfolio matched to their unique risk and return preferences.
And I'd add a well know adage:
'More monies been lost reaching for yield than has been lost at the end of a gun since time began'.
(hardwiredrobbery)
Something like that
Good luck & Best wishes....
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06-16-2021, 02:44 PM
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#11
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2012
Posts: 6,096
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Quote:
Originally Posted by street
Those 13 commandments, would of been nice to have 45 years ago when I started out investing.
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+1
Not until I was almost 40 did I figure out that following those type of "commandments" would be best for me. Fortunately there was still enough runway for me to gain tremendous benefit from them.
__________________
FIREd date: June 26, 2018 - "This Happy Feeling, Going Round and Round!" (GQ)
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06-16-2021, 02:46 PM
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#12
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2012
Posts: 6,096
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Quote:
Originally Posted by Amethyst
"Be content with market equaling returns."
Hardest for those who love bragging rights.
Which does not include me.
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True. I recall at least a dozen "financial advisors" over the years stating essentially that "market equaling returns are for suckers" in trying to convince me to have them manage my money. I am glad that I did not listen to them.
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FIREd date: June 26, 2018 - "This Happy Feeling, Going Round and Round!" (GQ)
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06-16-2021, 02:49 PM
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#13
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Thinks s/he gets paid by the post
Join Date: Jan 2017
Location: Des Moines
Posts: 1,371
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Very nice, thank you!
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Retired in 2013 and we are living the dream!
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06-16-2021, 03:37 PM
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#14
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2017
Location: City
Posts: 10,308
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Quote:
Originally Posted by jollystomper
+1 Not until I was almost 40 did I figure out that following those type of "commandments" would be best for me. Fortunately there was still enough runway for me to gain tremendous benefit from them.
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My story almost exactly. I spent about 30 years doing all the dumb stuff that most investors do. Slower learner I guess, but finally I figured it out.
__________________
Ignoramus et ignorabimus
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06-16-2021, 03:42 PM
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#15
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Thinks s/he gets paid by the post
Join Date: Oct 2017
Location: Tellico Village
Posts: 2,596
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Everybody makes Rookie mistakes....... for the first 20 years or so!! Simple is the best lesson I learned, but it took a while.
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Retired May 13th(Friday) 2016 at age 61.
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06-16-2021, 03:53 PM
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#16
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Thinks s/he gets paid by the post
Join Date: Oct 2010
Posts: 1,211
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Quote:
Originally Posted by OldShooter
They have apps for that? Why?
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I honestly don't know. I see ads from Fidelity about their great smartphone app and how I can track my investments easily. I don't need to track that closely or often.
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06-16-2021, 03:54 PM
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#17
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 37,931
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I have those apps, but I rarely look at them.
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Retired since summer 1999.
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06-16-2021, 05:01 PM
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#18
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Moderator
Join Date: Apr 2012
Location: San Diego
Posts: 14,137
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I'm sending this to my sons. Both have small Roths despite being only 18 and 20 with part time jobs. The younger one saves more - but tends to think like a daytrader. But he *sometimes* listens to mom.
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Retired June 2014. No longer an enginerd - now I'm just a nerd.
micro pensions 6%, rental income 20%
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06-16-2021, 05:13 PM
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#19
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2017
Location: City
Posts: 10,308
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Quote:
Originally Posted by rodi
I'm sending this to my sons. Both have small Roths despite being only 18 and 20 with part time jobs. The younger one saves more - but tends to think like a daytrader. But he *sometimes* listens to mom.
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I suggest that you send them this link, too: " If You Can" by William Bernstein https://www.etf.com/docs/IfYouCan.pdf (free 16 page download)
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Ignoramus et ignorabimus
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06-17-2021, 10:21 AM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2013
Location: ATL --> Flyover Country
Posts: 6,649
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Quote:
Originally Posted by OldShooter
They have apps for that? Why?
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How else are you supposed to trade the "MEME" stocks?!?
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FIRE'd in 2014 @ 40 Years Old
Professional Retiree
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