There’s an old Wall Street saying that goes: Don’t fight the tape. That was uttered in the days when stock quotes appeared on ticker tape, but the sentiment has persisted to this day. Stocks react to events on a day-to-day basis (that’s called volatility), but what is lost in the hysteria of the day is that over the long-term stocks rise in value a lot more frequently than they decline. At any point in time, you don’t have to look very hard to find some discouraging news that could erode stock values. This is fodder for pessimistic investors.
Perhaps the stock market may be headed for another drubbing. That’s what the fearful always dwell on. But instead of focusing on what may happen over the next few months or the next year, you should think about how your money will fare over the next decade or more. Successful investors like Warren Buffett always look well into the future and pretty much ignore any disappointing performance or forecasts along the way. This is reflected in the aforementioned bon mot: Don’t fight the tape.
Smart Money Tips
- Don’t pay for what you don’t need. One of the most important money lessons to impart on youngsters is to teach them to distinguish between “needs” and “wants.” Alas, this is a lesson that many adults haven’t yet mastered. Next time you use your car, look at the cars on the road and try to estimate how many of them are paid for. (This brings to mind the Will Rogers quip: The only way to solve the traffic problems of the country is to pass a law that only paid-for cars are allowed to use the highways.) You may “want” a newer car, but do you “need” it? Cars aren’t the only bugaboo in the family budget. Day-to-day expenses can really add up, for example, things that may provide an ego boost, but at the expense of a money drain. As the holiday season approaches, before making any purchase ask yourself if you really need it or if something less costly will suffice. Incidentally, as to the question raised above, less than one quarter of the cars on the road are fully paid for.
- Do you know what’s in your safe deposit box? If not, pay it a visit and take an inventory. At the least, it will help you avoid a fruitless trip to the bank attempting to retrieve something that isn’t there. If things in the box are lost or destroyed – a rare occurrence, but it does happen – you’ll have a record of what you lost. Incidentally, the institution that rents your safe deposit box almost certainly has no insurance on any valuable contents. That’s up to the box holder. The coverage isn’t very expensive and can easily be added to your homeowner’s or renter’s insurance policy.
Food for Thought
The affairs of finance are not well understood in Congress, and their regulations, meant for the best, generally operate badly.
-Robert Morris (1734-1806 – signer of the Constitution)
Money Can Be Funny
My formula for success is rise early, work late and strike oil.
-J Paul Getty
Word of the Week
vaticinate (va-TI-si-neyt) – To speak like a seer or prophet; to foretell the future.
Origin: From the Latin vaticinari meaning “to foretell, forebode, or prophesy.” This, in turn, comes from the word vates meaning “a poet or bard who is divinely inspired.”
If tarot readers really could vaticinate accurately, they could become rich from predicting winning lottery numbers.