Thursday, February 09, 2006

Financial Fairy Tales -- #2

Today's fairy tale: hold investments for the long term - everything will work out.

If we all just believe -- Tinkerbelle will come back.

It makes a great story --but is you retirement tied to wishful thinking -- do you just need to believe?

Those that use this lovely fairy tale to sell investments leave out a lot of the details.

Details hidden by fairy tales like these and the (reality they hide):

  • stocks always come back (even if it takes fifty years)

  • its different this time (its always different - but trees still grow - die - and fall)

  • the government knows how to control the economy (never has - never will)

  • this is a safe blue chip investment (blue chips are still gambling chips)

  • buy the dips (great in a bull - disaster in a bear)

  • buy more and your average price will be lower (think how many shares you can get at a penny each - just before they go to zero)

  • the price is down due to profit taking (who makes a profit on lower prices?)

Keep the belief in fairy tale endings for the fairy tales.

Think for yourself.

Markets do not always come back - within your lifetime. Even countries and societies eventually fail.

Mere investments are burning matches - don't hold one too long. Don't try to get that last 10%, look instead for a new speculation that has just taken off.

Use that pixie dust to fly with a new trend.

If you are to live happily ever after - prepare for sudden and long term change.



Anonymous Anonymous said...

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9:35 AM  
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9:52 AM  

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