Mistakes can teach life lessons
Ah, human frailty. What investor hasn't made mistakes trying to make money?
It may be that mistakes are even more endearing than successes.
Warren Buffett, the famed Oracle of Omaha, would be a bore if all he had going for him were his billions. George Soros is like that: a household name for money, power and (strangely) leftist opinions, but we are kept in the dark about the boo-boos that might humanize him. In contrast, Buffett freely admits sometimes wondering where his brains were.
Expertise is expected of those who sell securities. The worst thing about a stockbroker's life must be his mistakes. A year or so ago, a veteran broker was asked by a customer for ideas in energy and high-tech stocks. His picks: Chesapeake Energy and Hewlett-Packard. And maybe they'll work out yet. But meanwhile, broker and customer haven't telephoned. There is this deep pit between them, into which the prices of both recommendations plunged.
This holiday season is brighter for some true confessions about common pitfalls in investing.
A grown man, now a chief investment officer at a mutual fund company, said he got his start while still a schoolboy (a great idea right there, by the way).
At age 11 he invested extra money from a newspaper route — but too sentimentally, a common trap. He bought a few shares of a hometown-based snowmobile manufacturer, the former Rupp Industries, and later signed up for stock in a startup basketball team, the Cleveland Cavaliers. Result: no wins, two losses. Rupp went bankrupt, and the Cavs went private.
“Just because you like a company or a product,” he said, “doesn't necessarily mean it's a good investment.” And how many steel investors in Pittsburgh learned that one?
Another newcomer, cocky with a college degree, bought Delta Air Lines in 1981, pocketed a quick 50 percent and sensed his inner genius. Believing he could “time” the market and make money faster trading options, he failed miserably: “Short-timing is a losing strategy.”
A third penitent said he bought his first stock while employed at his first job out of college. It was a medical imaging company touted by a friend who was training in that very industry. The investor, a finance major, went the extra mile, too. He personally researched the company and bought in at $5 a share — and eventually sold out for $2.50.
“The experience taught me that no matter how much research you do or how much faith you have in a company, investing in one stock is too risky.”
If such tales seem to point up the wisdom of socking your wealth-building stake away in mutual funds (don't keep all your eggs in one basket), it's no big surprise.
All appear in the shareholder letter of the giant Valley Forge-based mutual fund enterprise, Vanguard Group, “In the Vanguard.”
Not all come across dripping regrets. Financial advisory executive Martha King relates that her father taught the importance of saving from an early age. Dad also shared his stockholding strategy and opened a bank account for her savings from baby-sitting. “I knew to set up ongoing contributions,” she writes. “The value of saving and taking a long-term approach are lessons that still apply today.”
And it's parents who should teach them. What more long-lasting gift?
Jack Markowitz is a columnist on Thursdays for Trib Total Media. Email him at firstname.lastname@example.org.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Undersized Beachum quietly excels at 1 of game’s pivotal positions
- Steelers notebook: Polamalu, Taylor unlikely to play, Harrison ‘ready’
- EPA says it won’t reguluate coal ash as hazardous waste
- Penguins’ defensive depth proves valuable
- Despite intimidation, women still passionate about video games
- Hotel building boom sweeps Pittsburgh region
- Pirates sign Corey Hart to 1-year deal
- Real estate union: Howard Hanna buys Langholz Wilson Ellis
- Port Authority fires two bus drivers involved in rollover crash
- Man involved with crash with officer dies in Pittsburgh hospital
- Police gather in Ligonier for Perryopolis officer’s funeral