At the height of the “tech boom”, in 1999, it seemed there was no end to the potential growth of tech stocks.  Headlines read, “We’re in a new economy!”  Writers told us, “The economic rules of the past no longer apply.”  I had people say, “Why would I invest in a diversified portfolio when I can make so much more in tech?  That’s crazy!”  So people concentrated more and more.

Then in March of 2000 the stock market stuttered.  Investors weren’t concerned, at first.  After all, “The new economy can’t fail.  It’s the future.”  Then the market slipped more.   People started to get nervous.  Then it slipped again.  The tech stocks, that had such a meteoric rise, suddenly cascaded down.  By the time the collapse ended some investors had been wiped out completely.  And it wasn’t uncommon for people to have lost 90% of their net worth. Read More→

“Buy value not market trends.” Sir John Templeton

During the market crash, nearly all of the people who were wiped out had bought into investment schemes promising ridiculous performance.  The investors gave their money to money managers they didn’t know, who were investing it in ways they didn’t understand, hoping to get lucky and strike it rich.  They based their decision on promises of easy wealth.  By the time they found out the promises were fake it was too late.  The performance charts were worthless.  Their portfolios devastated. Read More→

“When buying stocks, search for bargains among quality stocks.” Sir John Templeton

In the late 1990’s a group of brilliant, experienced financial experts joined forces and formed a trading company.   They developed elaborate trading strategies focused on finding disparities in prices.   They exploited those differences making a small profit per trade but millions of trades.  Then they leveraged borrowing more and more money.

They were making millions then guessed wrong. Read More→

“Buy when most people. . . including experts. . . are pessimistic, and sell when they are actively optimistic.” Benjamin Graham, quoted by Sir John Templeton.

“Investing is easy,” a neighbor remarked to me one Saturday while we stood in her front yard chatting.

“Really?” I responded.

“Sure, you just buy low and sell high.  How hard is that?”

“Not hard at all.  Just most people do the opposite.” Read More→

“What always impresses me is how much better the relaxed, long-term owners of stock do with their portfolios than the traders do.” Lucien Hooper, quoted by Sir John Templeton.

A friend and client emailed me asking what I thought about a particular investment that has been in the news lately.  “What about buying it?” he asked.  “It’s gone up a lot since the last time we discussed it.”  He’s concerned he’ll miss out on the skyrocketing growth.

He and I have talked about this investment before on the phone when he asked, “Do you think it’ll go higher?” Read More→

“Any investment strategy that fails to recognize the insidious effect of taxes and inflation fails to recognize the true nature of the investment environment and thus is severely handicapped.” Sir John Templeton

“We just want something safe.  We don’t want to take any chances on losing our money.  We want something secure and guaranteed by the government.”  The couple I was meeting with in my office one afternoon was explaining their goals for retirement.  They were in their early sixties and had saved enough to supplement social security with a meager income.

I said, “Do you realize over the next 30 years of your retirement, with average levels of inflation, the cost of living will triple.  So what you are living on the first day of your retirement needs to triple as well just to stay even.” Read More→