Finance 9. John D. Rockefeller: focus on your goals, not on the market “The person who starts simply with the idea of getting rich won’t succeed; you must have a larger ambition.” A lot of content in the financial press (columns in the newspaper, analysts on TV, pundits on blogs and websites, even articles which youmight read in the magazine that you’re holding right now) all talk at length about the goings-on in the stock market. But these words from John D. Rockefeller − whom many consider to be the richest man who ever lived − remind us that the market is only a means to an end. The true measure of investment success isn’t simply the amassing of wealth for its own sake. Rather, it’s the ability to have a vision of what you want to achieve with that wealth. This is not to say that we shouldn’t pay attention to what’s going on in the stock market, or forget about trying to understanding how it works, or how we might get it to work for us. But as much time as we spend reading about and thinking about the market, we should spend an equal amount of time focused on crafting a personal financial plan − the road map that outlines why we’re saving and investing, what we hope to achieve with our money and howwe’re going to do it. 10. Baron Nathan Mayer de Rothschild: in every crisis, there is opportunity “The time to buy is when there’s blood in the streets.” Perhaps the most famous piece of contrarian wisdom ever expressed, words that have been repeated by many successful investors over the course of history, but rarely so colourfully. The 18th-century British peer made a not-so-small fortune by putting his family’s money to work in extremely chaotic, politically turbulent times − in his case, immediately following the Battle of Waterloo. By buying assets when everyone else was predicting disaster and upheaval, the Baron secured his family’s wealth for multiple generations. While we may not enjoy the benefit of a British peerage, the Baron’s wisdom holds a lesson for all of us, one that aligns with the words of Buffett above. Bad times often make for good investments, and the point of maximum market pessimism is often the point at which maximumprofits can be made − if you have the discipline and patience to weather the market storm. Worth keeping inmind as the possibility of a correction or downturn grows, and news of political turmoil seems to be doing the same. 11. Sir John Templeton: diversification works “Diversification is a safety factor that is essential because we should be humble enough to admit we can be wrong.” As Sir Johnmakes clear, even the best investors will get it wrong sometimes. And, when they do, Sir John’s simple solution of diversification remains one of the most effective ways to protect ourselves against that risk. By spreading our investment eggs across multiple baskets, we protect ourselves if any one of those baskets ends up crashing to the ground. Because sooner or later, one of them will; because as Sir John points out, there is no such thing as the investor who gets it right 100% of the time. Such humility seems to be in short supply today. Over the past decade or so, the U.S. market has made most investors seem like geniuses, and anyone with the foresight to go “all in” on the so-called FAANG stocks (Facebook, Amazon, Apple, Netflix, Google) has made out like a bandit. Will the good times continue for FAANG and other tech-oriented investors? It’s not certain. What is certain, however, is that the smart money is almost surely spreading their assets into other ideas, other industries and other markets just in case the outrageously optimistic predictions of an endlessly profitable future for the big names of Silicon Valley turns out to be, well, wrong. 30 | www.snowbirds.org
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