Happy Father's Day to all the dads and grandpas out there. Chuck Jaffe at MarketWatch writes about lessons from his dad (link).
From The Daily Word (link2):
Today I acknowledge the good that my father provided for me, the lessons
he taught me, and the love he gave me. No one does everything perfectly
all the time. Each father does the best he can with the knowledge and
experience he has ...
In that spirit, let me say a prayer for my dad who is back in the hospital.
My dad had a six-grade education, worked hard most of his life. Some investment lessons I learned from him include:
* it is better to be lucky than good. My dad was rather typical, wanting to buy at market tops, sell at market bottoms. However, he had some good fortune. He had a 401k plan, and the organizer had the smarts or luck to center it on Sequoia Fund, which is a Warren Buffett style mutual fund. My dad had nothing to do with the decision, but benefited enormously. The fund did about as well as Buffett has done over the years, which is spectacularly well.
* Another lesson is, no matter how little a person has, they can save. We hear it all the time and observe it all the time, people that live in debt or pay check to pay check. Dad never made much money, was always lower middle class. However, my dad and mom always found a way to save some for the future. It terrifies me when I read that about half the population saves virtually nothing.
* As for his own investments, dad picked some load funds, and like I said, wanted to buy at market tops and sell at market bottoms. My mom was the one that insisted otherwise and made him stick to the stock market through the horrendous bear market of 1973/74 when the market declined 70% from its highs.
* Perhaps not a direct lesson from dad, but it is important to find a balance in terms of saving and spending. Slow and steady worked out well for my dad. It remains to be seen whether it will work out for the next generation.
* Sometimes the best thing to do is nothing. One reason my dad did well financially is avoiding the potholes. There are fast talkers and slick companies pushing the investment of the day. Hucksters can be pushing anything, whether it be stocks, bonds, real estate or precious metals. There are scammers in all corners, so a healthy bit of cynicism goes a long way. Rarely does the hot investment of the day work out in the long term. My dad always almost said no, and that stubbornness and cynicism was a long term secret. Moving from place to place, usually means the worst of all worlds not the best, and then there are taxes and transaction costs. The latter often being substantial when chasing hot investments.
* We are not perfect. Some folks dream of perfect parents. In the markets, a lot of folks dream of buying the low and selling the high. Observing my dad and latter my own experience taught me that this doesn't happen in real life. Those on the Internet that claim to be consistently doing this, tend to be liars or only reporting a small fraction of their transactions, or are hindsight traders that only report after the fact. Virtually no one with an audited track record has this ability over the long haul. Sure there are hot hands, but hot hands turn cold. Sure there are those that consistently make money, but over time, it tends to be money management, risk management that are huge factors in that consistency, more so than market timing.
Let me close by publicly thanking my dad for all his lessons and everything else he has done for me. Thanks dad, and Happy Father's Day, and get well soon.