Greed is simply hope run amok..
In discussion with a wealthy, self-taught, self-made investor, conversation turned to ‘what advice would you give your younger self?’
‘Investors risk their money not knowing how companies, commodities and economies will perform. Experience is the worst teacher, it gives the test before the lesson’ said Jim
‘You need two things; a decision making process, and a plan
Decide what type of investor you’re going to be, choose your method of analysis, develop rules, establish controls, create your plan, and stick to it!
Your plan is your playbook, your financial bible. Properly developed, it’ll prepare you for different scenarios, including how to handle losses – and there will be losses along the way’
Jim highlighted the dangers of excessive speculation and irrational investment behaviour with this:
‘One of history’s first recorded speculative bubbles was ‘tulip mania’ which occurred in Holland from 1634 to 1637
Driven by fascination with rare tulip bulbs, prices skyrocketed with some bulbs selling for as much as 10,000 florins – equivalent to a mansion!
The market peaked in February 1637, but collapsed when buyers suddenly withdrew, leading to plummeting prices and widespread financial ruin for speculators’
Jim went on: ‘There’s never a shortage of people wanting to give me the benefit of their inexperience, but most people have pre-packaged intellectual positions’
Has that been true of professional advisors too? ‘Well, that’s why I worked with you, because you stick to what you know, and you know what you stick to
The biggest consistent return I’ve made over the years is the compounding effect of investing via a structure where there’s no tax leakage’
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Toodle Pip
