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3 Fundamental Truths: Dealing with Capital Losses
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ten4one
Master |
03-Oct-2007 14:09
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You sounded more like The RockNRoll King who once said " Once for the money. Two for the show and Three for my Honey Cool cat Cool.........." Show me your money and I shall show you who is King :) Cheers! |
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Manikamaniko.
Master |
03-Oct-2007 12:22
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PS>Sorry to sound like an Ayn Rand fan... but she's simply stating the facts of life.
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Manikamaniko.
Master |
03-Oct-2007 12:20
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Money is king (or queen, lord, master, etc)... :) |
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ten4one
Master |
03-Oct-2007 08:46
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Farmer & MoneycomeMoneygo I totally agree and I share both your views. Tell it to the people of Myanmar and they'll all say 'GIVE US OUR FREEDOMS, BUT FIRST FILL OUR STOMACHS!' Ya, Warren Buffett also said that too 'You own a business not a stock'. You only own the business when you run the shows daily not once a year and when call upon to vote as a shareholder and not as an owner. Owners sell part of their shares and list them in the Stock Exchange publicly to raise funds so that they don't have to put in more of their own money. Retail Investors (like you & me) buy them if their stories sound good. In no way we own the Company, unless you take the Company private and buy-out the Company's shares. When Warren Buffett said that ...................it meant to be 'Think like a Owner instead of a S/Holder so that you don't to 'buy&sell' as often as I do and cut trading costs! If you ask me, what is trading costs compare to your capital gains! Cheers! |
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techsys
Master |
02-Oct-2007 09:53
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Nice post KiLrOy . One vote to you. |
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Manikamaniko.
Master |
01-Oct-2007 23:27
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The 3rd point is superbly put, but... |
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yuchao
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01-Oct-2007 23:13
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Thanks for the post. Especially the 3rd point. Very much awakening to enlightening to many and especially for me. |
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1234567
Senior |
01-Oct-2007 22:49
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kilroy, thanks for sharing. 
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KiLrOy
Master |
01-Oct-2007 22:05
Yells: "I buy only what I can see." |
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Evening Farmer dude, I am glad you benefit from it esp the 3rd pt coz I do as well. As a human flawed with emotions for the stock market, I have to constantly remind myself of the objectives of this game I am playing and also the aspect of GIVING which brings joy - the end state. I personally do not want this post to be outstanding *wink* in anyway but rather that people will benefit from the reminder I am reminding myself each day. You have a great evening! |
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Farmer
Master |
01-Oct-2007 21:41
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Good evening KiLrOy! Your posting though not outstanding in that sense, I feel it informative and timely especially when the market is charging ahead into new high and everybody is busy making money work harder for themselves forgetting the fact that by having more and more $ doesn't necessarily bring you greater happiness. I believe Bill Gate, Warren Buffett, Li Ka Shin all came to realize that. Thanks for your posting, I will agree to your 3rd truth! |
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KiLrOy
Master |
01-Oct-2007 20:14
Yells: "I buy only what I can see." |
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Fellow value investors... when the time comes, remember these 3 truths. Happy Investing Falling stock prices are sometimes a hard pill to swallow but long-term investors shouldn't be concerned.Many investors have a hard time dealing with falling stock prices but for the wrong reasons. No matter how often you preach the virtues of the buy-and-hold method, the true test of courage comes when you watch your holdings nose dive twenty percent in one afternoon. Anyone who has been through a bear market knows that it takes tremendous discipline and dedication to stick to your guns while everyone else liquidates their holdings. Plagued by images of depression, recession, and corporate layoffs, manic Wall Street becomes a breeding ground for chaos and faulty logic. Perfectly good companies begin selling for fractions of their true value, despite a lack of change in the long-term economics of the business. Here are three fundamental truths that will help you deal with short-term market losses. Truth One: You own a business, not a stockWhat you are holding in your portfolio is a piece of a business, not a stock. Investors who purchase shares of stock simply because they are going "up" or are going to be the "next big thing" are essentially gamblers. They buy a commodity with the belief (rational or not) that the next person in line will pay a higher price for it than they did. The problem is, this cycle can't go on forever, and at some point, someone is going to look around, realize what happened, and bail ship. In order to be a successful investor you must do two things. First, remove all emotions from each of your financial decisions. Romeo and Juliet were terrific lovers, but not very logical people (and look where that got them). Letting your heart and emotions impact your actions is foolish in most circumstances, deadly in economic ones. Second, learn to separate the underlying business from the stock price; they are not the same thing (read that again). You've heard it said a million times; even a great company is a lousy investment if you pay too much for it. Truth Two: If you are a long-term investor, falling prices are a blessingThe only time a bear market is bad for you is when you need your money immediately. For those who are investing with a time frame of ten or more years, declining prices represent only one thing: the opportunity to buy more of their favorite company at a lower price. It's kind of like a giant garage sale where the lady of the house decides she wants new drapes and, as a result, decides to sell all of her living room furniture for half price. It doesn't have to make sense to the buyer. Indeed, a smart one would jump at the opportunity. All too often, investors try to convince the woman that she shouldn't be selling her coffee table to them for so cheap. Truth Three: It doesn't matterMost of the investment crowd will fight it, but it's true. In the end, your pocketbook really isn't what matters. Think back to the time before you owned any investments. You were still alive then, right? You could still have a good time? You still had friends?
Money is literally a piece of colored paper with the picture of a dead person on it. Bottom line. Society has assigned value to it, so we accept it, and it can be a very powerful tool in our lives. You must never make it an end unto itself. Wealth can never be the "goal". It is the means by which we accomplish things. It's like owning a hammer - no sane person wants to own the hammer for the sake of "owning it" - they want it for what it can do. It can build and create. That's the goal of prosperity; to attain the financial freedom to provide a better life for yourself, your family, and everyone with whom you come in contact. If you make the pursuit of riches your highest goal in life, you will feel miserable and empty. Your blessings, gifts, and finances only realize their true value when you give them. The guaranteed way to feel wealthier is to give what you already have. You see the joy it can bring others. The feeling of generosity and happiness that comes with giving is true wealth. |
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