Today I’m going to talk about some investment lessons I learned from my Dad. My Dad passed away about 20 years ago. He was a hard working man who gained common sense from experience. I learned a lot from him. I learned about persistence, enthusiasm, and that your word is your bond. He taught me that your handshake should mean just as much as any written contract. He taught me to be on time and to keep your promises.
Now that I’m a grandpa, I remember how much he loved his grandkids; and it makes me want to be one of the better granddads around. I miss my folks but I guess that is why memories are so cool.
I’ve been in the financial service business for 37 years and I’ve thought about some of the things my Dad told me when I was young that had nothing to do with investing, but in fact had a bearing on my mindset now when it comes to investing. You’ll see what I mean.
I remember one of my birthdays when I was young; I had received about $25 in cash for gifts. Of course, at that young age, with $25 I might just as well have been a millionaire. I started talking about all the stuff I planned to buy with my riches. I wanted to go to Pat’s Toy and Hobby Shop; I wanted to buy baseball cards; the sky was the limit. My Dad looked at me and said:
“Phil, don’t let that money burn a hole in your pocket.”
I said, “What do you mean?”
He said, “Think about it and you’ll know what I mean.”
I did think about it and I knew what he meant. Here is the investment lesson I took from that pearl of wisdom: The market is always going to be there and opportunities present themselves to those who are patient. This rings true in the stock market, the real estate market, the bond market, or any market. In the investment business, patience is a major virtue.
When it comes to the stock market, in general at least one time per year (and usually two times per year) there is a 10-15% decline in the market indexes. For individual stocks, it happens more often.
Everything was hunky-dory in 2017. 2018 was a mess; especially in the last quarter of the year. Remember looking at your statements during that time? Not a pretty sight, but the selloff created opportunities.
If you can’t find anything to buy right now, just wait. Set your price targets and parameters and then stay patient. Cash is a great alternative and isn’t trash; especially if it is set aside for opportunity. You’ll be surprised at the prices you can get if you’re patient.
Lastly, maybe you have heard the acronym FOMO: fear of missing out. That happens when the markets go up and you aren’t fully invested. FOMO causes money to burn a hole in your pocket. Don’t do that.
Until next time, I’m Phil Albitz…thanks for watching.
