Attitude Media Investing Essay
Attitude: Get Rich Slow
Introduction to Investing by John F Groom
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Looking for get rich quick schemes? You've come to the wrong place. But if you're interested in a serious investment strategy, we have a lot to offer. The most important thing to learn about investing is that you're probably wrong:
- • If you think you can pick stocks that will outperform the general stock market, you're probably wrong.
- • If you think that by active trading of stocks, commodities, or any other financial asset, you can make money, you're probably wrong.
- • If you think that your brother in law's start up is the next Apple, you're probably wrong.
- • If you're absolutely sure about the direction any financial market is headed, you're probably wrong.
On the other hand, if you think that God created stock markets to teach humility to smart people, you're probably right.
We're not trying to be cute here. One of the bedrock principles of good investing is skepticism, up to a point. But Warren Buffet, and a few others, do have long term records of outperforming the market with their investments. Every year, in America and increasingly throughout the world, people make fortunes by investing in new ideas and new companies, or old companies with new prospects. But in order to do that you have to be very lucky, or very smart - and very discerning.
Attitude Media's perspective on the world of finance.
We can't help you be lucky, but we can give you the benefit of decades of our experience. This will probably only help if you share the Attitude Media viewpoint on investing, which is based on the Attitude Media view towards life; we're about trying to create real value. We don't care about the millions you might make from the lottery; games of chance don't interest us. Investing, just like about everything in life, is a calculated gamble, but we're more interested in the "calculated" than the "gamble". Millions of people get rich in all sorts of ways; lawsuits, corporate fraud, whistleblower payments, government subsidies, and other scams of every possible description. At Attitude Media we're not about just "getting" money, but about earning it in productive, honorable ways. Our main focus is thus about creating value, and most pure investment activities don't create much value, as we'll detail below.
There is certainly an important role for financial professionals in raising capital or debt for companies, and for facilitating some liquidity for publicly traded companies. But we would guess that 90% of all financial markets activity does not, in the long run, create value; the vast majority is a zero sum game, more like gambling in a casino than true value creation. Financial professionals create value when they raise venture capital that allows a company like Apple or Google to grow; they don't create value when they participate in computer generated split second trading designed to anticipate and profit from manual trades. Or when they help a country like Greece hide the true extent of its debts. Or when they persuade retail investors to trade frequently. Unfortunately, in the last few decades investment banks and others seem to have focused far more on asset trading that asset creation.
For most people who share our philosophy, the main means of creating value will be some occupation outside of finance. But everyone needs to learn to be an astute investor if you hope to keep and grow your hard earned savings. You may need to invest for retirement, or to provide for your family, or to increase what you can give to charity, but no matter why you're investing, you should have an investment strategy.
Creating real value also means we don't have much interest in technical investing. There are many people on Wall Street who spend their lives analyzing chart patterns, trying to determine where the stock market is going based on the historical analysis of stock prices and a multitude of other obtuse data points. We don't think technical investing works, but, more importantly, we don't care, because that's not the way a thoughtful person really wants to spend their time.
Like everything we do at AM, our orientation is long term and fundamental. We have no idea if the stock market is going up in the next several days, or, for that matter, months. We have succumbed to the temptation on occasion to try to make this sort of guess, and we've usually been wrong and lost money; sometimes quite a lot of money. We are sure that there are some on Wall Street, or in London or Hong Kong, who can make money trying to make such short term bets. But we can't, and we're not really interested in learning how.
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