I’ve earned a “D”
I told my wife that as of today, I had become a successful investor. She gave me one of those – “Well, that’s awesome dear!” kind of comments, but didn’t follow it up with one of those “Well, why is that dear?” kind of questions.
This is because investing isn’t really her thing. This is surprising because she likes keeping track of our finances on the expense side. She’s just glad that I like to keep track of the stuff on the investment side of our financial house because she has no interest in it. Her eyes start to glaze over any time I mention the thought that she might have to take care of this stuff, if I keel over or get hit by a bus one of these days.
So, anyway, I had to prompt her with – “Do you know why I say that I’m now a successful investor?” and of course she got the hint and said “Why dear?”
I told her that I had finally got my stock picking accuracy up to sixty percent. Now, my wife was a stellar student back in her school days and I can see that she’s equating sixty percent with the “D” grade on a standardized school grading scale. Not, the same thing, I told her. I’m a little fuzzy on the facts, and they might be out of date anyway, but I told her that most professional investors on Wall Street don’t even manage to beat the market. So, they are wrong over 50% of the time and that’s why a lot of people give up on them and just put money in index funds.
In 1989, Peter Lynch wrote a fantastic book about investing called “One Up On Wall Street”. I never got around to reading it back then. I’d sworn off of Wall Street after the crash of 1987. Every spare nickel I had or could borrow was going into the privately held company that I worked for. Yeah, after Enron, everybody knew that was a bad idea. But, the business I worked for didn’t take a rocket scientist to figure out and made a boat load of cash. By the time Enron became the poster child of the corporate ethics seminars, I was retired and diversifying my retirement nest egg into real estate and the stocks of between one and two dozen different companies. Peter Lynch revised his book in 2000 and it was this edition that I finally read. As many of you know, Peter Lynch was a wildly successful investor who had managed the behemoth Magellan Fund for Fidelity Investments. His investment book was one of the best I’ve read on investing and was just as entertaining as it was educational. It’s also as relevant today as it was when it was revised over a decade ago.
Peter Lynch wasn’t too bashful about listing some of the great mistakes he made as an investor. In fact he said it’s just fine by him, to only be right sixty percent of the time.
So, there you have it. I finally earned a “D” and I’m proud of it!