A gaze in the mirrow

Investment Analysis Clubs Saul’s Investing Discussions
#1

Today I opened a new program, Seeking Alpha, and started listing my portfolio … from memory. A game, at first, then became a challenge.

Why … of the 36 holdings, I was able to remember 21.

Most of these have done very well over the long haul.

So what does this tell moi.

Multiple choice:

  1. The memory is gone
  2. Too few positions
  3. Too many positions
  4. No idea what I am doing
  5. Directional confusion??

The holdings are divided into 3 different subset portfolios.

  1. As a Pro subscriber, I hold all but 4 Recs. Why? All the Pros are much more knowlegeable than I. After all thats why I subscribed.
    However some recs I do not participate.

  2. Sauls board, 7 stocks

  3. The balance, stocks I have vested interest for 30 years and I know. Like a faithful wife or spouse.

So the “gaze in the mirror”

  1. Am I a true Fool
  2. Am I a real fool
  3. Am I price and stock anchoring
  4. Am I following Peter Piper

Upon reflection, the majority of my stock holdings, I know very little about. The basic fundamentals all look ok, but is that really enough.

Since joining the Fool, I have learned how much I DO NOT KNOW.
This board, in particular, has really opened my brain cells.

So what now?

Nobody said it was easy.

https://m.youtube.com/watch?v=v525UGbA448

Shakerag

17 Likes
#2

Nobody said it was easy.
Actually I think I remember Saul saying it was easy and Buffet too. I have seen and heard many rich and successful folks saying making money is easy. You just have to have the aptitude and the discipline.
Ant

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#3

I have seen and heard many rich and successful folks saying making money is easy.

Wow, anthonyms, this is some food for thought on a Sunday morning for sure. I have heard these words many times before as well (for example, Buffett guaranteeing that he could make 50%/year on a portfolio under 10MM easily)–but, just as advertisers say that we need to see ads for a product at least seven times before we actually begin to notice it, I never really pondered this thought until this calm, peaceful, Sunday morning brought your words to the forefront yet again and they actually began to take root.

There are a lot of opinions on the difference between the rich and the poor. I have one quote and one opinion, and I hope these ideas will be of help to this wonderful community of like minded thinkers:

First, the quote (paraphrased):

“Rich people acquire assets, poor people acquire liabilities.”–Robert Kiyosaki

I’ll never forget when this quote hit home with me. I was a business owner at one time, and one day one of my staff members stopped me outside my business as I was walking in from lunch. “Look at what we got!” she said.

Her boyfriend was polishing their new toy. A Humvee. It was the first model. The ENORMOUS one. The one that was about eleven feet wide and which drank a gallon of gas every 13 miles.

“What…” I asked her, knowing that on her salary this was a foolish decision, “what are you thinking buying this?”

“Oh, come on,” she countered, “you get a job so you can buy things, right? Between his and my salary, we can buy this.” Her boyfriend smiled at me as he continued wiping down the operating-room clean hood of his new vehicle.

I thought about the price of the Hummer and how much that money could grown into if it was invested for twenty years. Maybe enough to retire on, or at least give her a big step toward retirement.

Long story short–a month later she was asking me if there were any overtime shifts available. Six months later, they were unloading the Hummer. A year later, they had broken up.

MORAL: Get rich by buying assets (stocks, businesses, education) and not liabilities (More car/house/boat than you need.)

Now, the opinion:

Rich people believe there is plenty, MORE than plenty, FAR MORE than plenty, for everyone to go around. Poor people believe there is a finite amount of everything, and you have to get yours, your neighbor be d****d, before it is gone.

You and I have seen this before. It is the day after Thanksgiving. The doors of Wal Mart open and at 5AM hundreds of people are rushing through, soon to be literally fighting over big-screen TVs, this year’s must-have teddy bear, and the latest tech gadgets.

Now, some of these people may in fact be very wealthy. But I’m willing tho bet that the vast majority are not, because the PHILOSOPHY that brought them there at 5AM has told them that they have to get while the getting is good. And once that TV is gone, they will never get another one, so it’s mano a mano time, your neighbor be d****d. A rich person knows a TV is a commodity. NOT worth fighting over, especially before daybreak.

So–long story longer–is making money easy? I confess that I haven’t yet gotten to the point in my life where I can say that with utter conviction. But I DO think there is a method to getting rich, and that method revolves around having the right PHILOSOPHY about how to get rich:

1.) Steer your money towards assets and not liabilities.
2.) The self-made rich should be admired, not resented. They are an example of what we can all become, and they have not taken ANYTHING from us. There is plenty, much more than plenty, to go around.

Thanks again, antonyms, for the Sunday morning inspiration :slight_smile:

46 Likes
#4

Why … of the 36 holdings, I was able to remember 21.

Most of these have done very well over the long haul.

So what does this tell moi

Perhaps you’ve suppressed the memory of the ones that aren’t doing too well?

4 Likes
#5

I disagree that a house is a liability not an asset. Every house I have bought has appreciated greatly by the time I sold it. I buy houses that need a good eye and a serious makeover not that have structural issues. I sleep well at night with this diversification in my holdings ie real estate. It does not make the returns I make in the market but it a beautiful asset that gives me piece of mind. Most importantly, my wife loves it. I agree with a boat and car being liabilities but shouldn’t you enjoy yourself as well. A nice car can be fun to drive and I do that as well understanding it is a depreciating asset. I am thinking of a Tesla next if my portfolio keeps doing well. I believe that you should earn money but live in the moment also! You can’t take it with you.

Htownrich

3 Likes
#6

Nobody said it was easy.

Well, actually, I did. But “easy” is a relative term.

For drill, I spent a 30 year career in IT in various roles. A lot of that was brain sweat hard. I play a few musical instruments. Performing music well is enormously difficult. I do a lot of construction projects on my home. Hoisting a 10 foot 4x10 8 feet in the air with no assistance is very taxing.

For years I thought investing was very hard. I would read the financial press and often come away from the article befuddled and bewildered.

Saul has simplified the whole issue by identifying the stuff that really matters and more or less ignoring all the rest. Maybe it’s not “easy”, but it’s a whole lot easier.

4 Likes
#7

Htownrich,

I disagree that a house is a liability not an asset.

It depends. The way it’s described in “Rich Dad, Poor Dad” an asset puts money in your pocket which a liability drains money out. If you buy a house, rent it out, and it generates positive cash flow then it’s an asset. If you “consume” the house by living in it, it can be detrimental to think of it as an asset. It is really an expense, sort of equivalent to renting a house. You can rent a small house or rent a big house. A big house will usually cost you more so you are consuming more. So if you purchase a big house instead of a small house then your monthly expenses go up but if you think of it as an asset then you will probably justify the purchase of the larger house an good investment. This way of thinking leads people to up their monthly expenditures and keeps them working for more years than if they had used their excess cash to buy real investments, not larger liabilities disguised as “investments”.

Htownrich, it’s your money and you can use it how you wish. It’s about priorities in life. For me, the priorities are 1) to put away a monthly minimum for investment, then pay non-discretionary expenses, then spend on discretionary expenses. If you want to read what the result was then see this post: http://discussion.fool.com/the-invisible-workers-31677596.aspx?s…

Good luck to you.

Chris

5 Likes
#8

My kids and I can safely walk our neighborhood at night. We can leave the front door unlocked knowing our stuff will be there when we return.

My neighborhood is quiet. No incessant traffic, fighting or police sirens.

The schools are fully accredited with adequate staff to student ratios. And you don’t pass through metal detectors manned by an armed guard to go to class.

The pizza guy would never refuse to deliver to us.

We are within biking distance of 3 public parks with modern jungle gyms, not the rusted stuff they stopped making 20 years ago and would never pass current safety codes.

If you don’t think these are assets, you probably don’t have kids, or you think the other neighborhoods only exist on the nightly news.

Hopefully all of this will pay off and my kids will have find it easier to make money than the kids trapped in the other neighborhoods.

Brad
long on my neighborhood, a priceless asset

10 Likes
#9

Perhaps you’ve suppressed the memory of the ones that aren’t doing too well?

Yes Polymermom, you are right.

The question was how to rid myself of the favorites in my head, not becoming “richer”.
It was not easy but … sold them the last few sessions.

Cheers,

Mark

#10

It was not easy but … sold them the last few sessions.

You probably sold at the right time with all the Chinese turmoil. Congrats!