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Gems from Larry's "Rational Investing--"
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Taylor Larimore
06-29-2003, 9:54 PM | Post #87519 |
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Hi Diehards:
Diehard Larry Swedroe, with over 8000 posts, is one of our most valuable contributors. His last book is titled, "Rational Investing In Irrational Times." It is about 52 Investment Mistakes We Need To Avoid.
Each mistake (and I've made many of them) has its own Chapter. I think it will be most helpful to learn Larry's "gems" if I simply list the title of each Chapter-- and the mistakes we need to avoid:
1. Are you overconfident of your skills?
2. Do you project recent trends indefinitely into the future?
3. Do you believe events are more predictable after the fact than before?
4. Do you extrapolate from small sa mples and trust your intuition?
5. Do you let your ego dominate the decision-making process?
6. Do you allow yourself to be influenced by a herd mentality?
7. Do you confuse skill and luck?
8. Do you avoid passive investing because you sense a loss of control?
9. Do you avoid admitting your investment mistakes?
10. Do you let the price paid affect your decision to continue to hold an asset?
11. Are you subject to the fallacy of the "hot streak"?
12. Do you confuse the familiar with the safe?
13. Do you believe you are playing with the house's money?
14. Do you confuse information with knowledge?
15. Do you believe your fortune is in the stars?
16. Do you rely on misleading information?
17. Do you only consider the operating expense ratio when selecting a mutual fund?
18. Do you fail to consider the costs of an investment strategy?
19. Do you confuse great companies with great (high-return) investments?
20. Do you understnad how the price paid affects returns?
21. Do you believe that more heads are better than one?
22. Do you believe active managers will protect you from bear markets?
23. Do you fail to compare your funds to proper benchmarks?
24. Do you focus on pretax returns?
25. Do you rely on a fund's descriptive name when making purchase decisions?
26. Do you believe active management is a winner's game in inefficient markets?
27. Do you believe hedge fund managers deliver superior performance?
28. Do you treat the highly likely as certain and thehighly unlikely as impossible?
29. Do you confuse berte-the-fact strategy and after-the-fact outcome?
30. Do you try to succeed even when success is highly unlikely?
31. Do you fail to understand the importance of saving early in life?
32. Do you fail to evaluate the real cost of an expenditure?
33. Do you believe diversification is the right strategy only if the investment horizon is long?
34. Do you believe that this time it's different?
35. Do you fail to tax-manage your portfolio throughout the year?
36. Do you let taxes dominate your decisions?
37. Do you confuse speculating with investing?
38. Do you try to time the market?
39. Do you rely on market gurus?
40. Do you use margin to boost investment returns?
41. Do you work with commissioned advisors?
42. Do you spend too much time managing your portfolio?
43. Did you begin your investment journey with a road map?
44. Do you have too many eggs in one basket?
45. Do you underestimate the number of stocks needed to build a diversified portfolio?
46. Do you believe diversification is determined by the number of securities held?
47. Do you confuse indixing with the exclusive use of an S&P 500 fund?
48. Do you consider your home as your exposure to real estate?
49. Do you use long-tem bonds or bond funds for your fixed income allocation?
50. Do you purchase products meant to be sold, not bought?
51. Do you chase the IPO dream?
52. Is your withdrawal assumption rate in retirment too aggressive?
Thank you Larry Swedroe for these investment gems.
Best wishes.
Taylor
Originally posted in thread: 28205
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