The Three Magic Words For Investing Your Money
The Three Magic Words For Investing Your Money by James Altucher – Daily Reckoning
In the history of capitalism, this is the hardest time ever to invest. Stocks are trading at record highs. People have gone broke and lost their jobs. And despite the stock market’s records, fear more than greed rules the news and tries to rule thoughts.
In short: people are scared it’s all going to blow up. And I do think the uncertainty is going to rise quickly so I wanted to put this note together.
In 2001 and 2002 I lost all my money through bad investing. The same thing happened to me on a couple of occasions after that.
So why should anyone trust me about investing? You shouldn’t. You shouldn’t trust anyone at all about investing. This is your hard-earned money. Ultimately, you should only trust yourself.
What I can say is this: The most important three words in investing are “I don’t know.” If someone doesn’t say that to you then that person is lying or deluded.
I was preparing one morning for my podcast conversation I was having with Stephen Dubner, co-author of Freakonomics and “Think Like a Freak.” One of the statistics he pointed out was that CXO Advisory Group had polled the predictions of 500 investment strategists and pundits.
How’d they do?
The “experts” had a 47% success rate — less than even odds. Good luck if you listen to any of them.
Here’s my experience (and perhaps I’ve learned the hard way about what NOT to do and a little bit about what TO do.):
I’ve run a hedge fund that was successful. I ran a fund of hedge funds, which means I’ve probably analyzed the track records and strategies of about 1000 different hedge funds.
I’ve learned one major thing, which I will repeat below: all of Wall Street is a scam.