I loved this quote from Jesse Livermore (via Money Academy):
“The average man doesn’t wish to be told that it is a bull or a bear market. What he desires is to be told specifically which particular stock to buy or sell. He wants to get something for nothing. He does not wish to work. He doesn’t even wish to have to think.”
- First, you shouldn’t spend too much time caring whether we’re in a bull or bear market. If your portfolio is constructed in such a manner that you have to be able to constantly be able to pinpoint bull or bear moves then you’re doing it wrong. There’s a big difference between creating a flexible portfolio and one that relies on being able to navigate every twist and turn in the market.
- Second, anyone who tells you which stocks to buy or sell is probably selling you an idea in the hopes you’ll pay them a nominal fee in return. After all, if they knew which specific securities were going to go up before the fact then why would they spend their time telling you their most profitable secrets before they’ve become profitable?
- Third, we should loathe the idea of getting something for nothing. We should embrace the idea of proving to our peers that we have something of value to add. If our output is seen as being valuable then the money takes care of itself. But mistaking money for the end and not the means is like thinking you can always find the free lunch….
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.