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The 13 Characteristics of a Good Investor
Old 06-15-2021, 01:52 PM   #1
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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):
  1. Have a plan.
  2. 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]
  3. Diversification in and among asset classes is the cornerstone of good portfolio design.
  4. Be content with market equaling returns.
  5. Most stocks under perform the market.
  6. 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."
  7. 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]
  8. Don't chase past performance.
  9. Slow and steady wins the race.
  10. 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."
  11. Ignore all stock market predictions.
  12. Ignore the daily noise on Wall Street.
  13. 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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Old 06-15-2021, 08:25 PM   #2
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Thanks, nice summary. My own version is keep it simple, donít get greedy, and donít get scared.
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Old 06-15-2021, 10:56 PM   #3
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Vanguard Index funds and stay the course
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Old 06-16-2021, 03:33 AM   #4
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I heard that 13 is an unlucky number.
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Old 06-16-2021, 03:42 AM   #5
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"Be content with market equaling returns."

Hardest for those who love bragging rights.
Which does not include me.
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Old 06-16-2021, 05:12 AM   #6
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That probably translate as good advice for much of our lives
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Old 06-16-2021, 05:59 AM   #7
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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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Old 06-16-2021, 08:20 AM   #8
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Quote:
Originally Posted by Midpack View Post
... delete the stock market app from your cellphone ...
They have apps for that? Why?
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Old 06-16-2021, 08:26 AM   #9
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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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Old 06-16-2021, 08:30 AM   #10
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Quote:
Originally Posted by street View Post
Those 13 commandments, would of been nice to have 45 years ago when I started out investing.
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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Old 06-16-2021, 02:44 PM   #11
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Those 13 commandments, would of been nice to have 45 years ago when I started out investing.
+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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Old 06-16-2021, 02:46 PM   #12
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Quote:
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"Be content with market equaling returns."

Hardest for those who love bragging rights.
Which does not include me.
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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Old 06-16-2021, 02:49 PM   #13
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Very nice, thank you!
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Old 06-16-2021, 03:37 PM   #14
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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.
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.
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Old 06-16-2021, 03:42 PM   #15
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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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Old 06-16-2021, 03:53 PM   #16
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They have apps for that? Why?
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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Old 06-16-2021, 03:54 PM   #17
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I have those apps, but I rarely look at them.
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Old 06-16-2021, 05:01 PM   #18
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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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Old 06-16-2021, 05:13 PM   #19
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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.
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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Old 06-17-2021, 10:21 AM   #20
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They have apps for that? Why?
How else are you supposed to trade the "MEME" stocks?!?
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