Five jokes that teach you about investing
As John Cleese put it, 'He who laughs most, learns best'.
‘I have bad news and worse news...' a financial adviser says to his client. ‘Which would you like to hear first?' ‘The bad news,' says the client. ‘All your money will be gone in 24 hours.' ‘Oh my gosh!' the client says. ‘What could be worse than that?'
‘I should have called you yesterday.'
A bad situation won't get better by sticking your head in the sand and hoping it goes away. Impulsiveness is the enemy of sound investing, but you do need to be willing to take action quickly when opportunities present themselves or a company's fundamentals start to deteriorate.
A senior citizen received a call from his wife while driving home. 'Albert, be careful,' she warned, 'I just heard on the radio that there's a car going the wrong way down the highway.' 'Mabel, they don't know the half of it,' replied Albert,
'It's not just one car, there are hundreds of them.'
To do better than average, you need to be willing to go against the crowd – but you also need to be right. Blind contrarianism isn't a good strategy.
Early in the 20thCentury, there was a market craze in sardine trading when sardines disappeared from their traditional waters in California. Commodity traders started to bid up the price of canned sardines, which then soared as trend-spotters started buying, hoping to turn a quick profit. One day a buyer decided to treat himself to an expensive meal and so opened a can to eat. He immediately felt sick and told the seller that the fish are rotten. ‘You don't understand', the seller said.
‘These are not eating sardines. They're trading sardines!'
A lot of people treat stocks like trading sardines, hoping to buy and flip them at a higher price. What really matters is where the current share price stands relative to the stock's intrinsic value. Focus on the underlying business, then consider the price.
Charlie Munger tells a story about when he was in Minnesota buying a fishing lure. He said to the shop owner 'My god, they're pink and green, do fish really take these lures?'
The old man replied, 'Mister, I don't sell to fish'.
Everywhere you look in the financial industry, someone is trying to sell you something. News and advice is specifically designed to excite investors. ‘Click bait' as they say. Remember that what brokers and banks are selling isn't necessarily going to get you the best results, it may just be an easy sales pitch.
Finally, every investor has time and resource constraints, so it's important to focus on the most promising opportunities …
An old man crashed his grocery cart into that of a much younger fellow while shopping. The elderly man explained apologetically that he had lost track of his wife and was busy searching for her. The younger man said that by coincidence his wife had also wandered off and suggested that it might be more efficient if they looked for the two women together. Agreeing, the older man asked his new friend what his wife looked like. 'She's a gorgeous blonde,' the fellow answered, 'with a body that would cause a bishop to go through a stained glass window, and she's wearing tight white shorts. How about your wife?' The senior citizen wasted no words: 'Forget her, we'll look for yours.'
Jokes aside, Intelligent Investor is loading up the van and going on tour in May, with events on the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. If you'd like to hear us talk about building a portfolio to weather any storm, book your spot here.
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