I didn’t plan on writing this when I woke up this morning. Every year on my Birthday, I like to take some time and reflect on the past year, or years. What I’ve learned, what I’m grateful for, what I need to focus on more, etc… Lately, I’ve been starting my day with a workout (I need to keep this up), and as I was walking on the treadmill, I did some thinking.
I still struggle with putting my thoughts down on paper, so I am not sure why, but this year I decided to make a list. This is purely my opinion. You may agree or disagree with them. Some may be controversial or debatable… but it’s my list! Hopefully the below gets you thinking a little bit too. In honor of my 42nd Birthday, here is my list of 42 lessons I’ve learned about the markets, investing, and life in general.
1- Cash is not king… how you invest your cash is!
2- Diversification is overrated. Owning a few things is more than enough, especially when they are performing well.
3- Buy High, Sell Higher is better than Buy Low, Sell High. Nothing is guaranteed in investing, but there is a higher probability that a stock that is going up will continue to rise, and a stock that is going down will continue to decline. There is a reason something is going up or down!
4- Rebalancing hurts returns. Why sell something that is making money to buy something that has underperformed? Stick with your winners!
5- The trend is your friend. Never question how far a stock or market can go up or down.
6- TIME beats TIMING… Let the market do the heavy lifting for you.
7- Looking at your account balances less is better for your returns... and your emotions… and your financial advisor (just kidding about the last one).
8- When people are panicking… BUY… Then sit tight.
9- Calling tops and bottoms is a fool’s game.
10- The actual “dollar amount” of money you have is not what you should focus on. Financial freedom is reached when your savings and investment accounts allow you to stop working. For some people, it is $200,000, and for others, it’s $2,000,000. Focus on how much money you need to live and how much you can withdraw from your accounts if you needed to.
11- Term Life Insurance is a must-have if someone other than you relies on your income… Unless you have reached Financial Freedom already.
12- Inflation kills purchasing power… It will never go away. Invest wisely to combat it.
13- Cash is a losing investment. A safety net is essential and it’s ok to lose money on your safety net by leaving it in cash. However, cash will not keep pace with inflation, which hurts your purchasing power. Finding your comfort level with cash is important. Once you have reached that, invest the rest.
14- Smart investing can BEAT the market.
15- ROTH IRAs are better than Traditional IRAs.
16- Analysys’ price targets are useless.
17- Earnings growth matters. Companies that are consistently growing their earnings perform the best.
18- Technical analysis is more useful than fundamental analysis. To be clear, strong fundamentals matter, but the charts tell us when and how to act.
19- Paying taxes is a good thing. It means that you made money.
20- Keep your eyes on your own paper. Never worry about “missing out” on something or what returns your neighbor made.
21- Pullbacks are violent. Rallies are slow and steady.
22- CNBC is entertainment. It can be helpful to stay up to date on headlines and help with idea generation. But never rely on it to make money in the market.
23- News outlets sell FEAR better than OPTIMISM… Read that twice!
24- Compounding growth is the 8th wonder of the world. Once the flywheel of growth gets moving, it’s very powerful.
25- The best savers set up auto-pay into their investment accounts.
26- Invest in what you can explain and understand.
27- Bonds can play a part in your investing approach, but are not mandatory for your portfolio. I like them for your safety net.
28- The 4% rule is too low. Most people will be able to withdraw a much larger percentage of their accounts when they stop working. A 6% withdrawal rate is 50% more money in your pocket.
29- In my opinion, owning International equities is not worth it. They lag behind our market in the long term, and understanding everything in our economy, political landscape, and markets is hard enough.
30- Time is our greatest commodity. Spent it wisely.
31- “I don’t have time” is our greatest excuse in life. You do! Just plan your day better.
32- Health above all. Without it we have nothing.
33- Money is important. It is a tool that allows us to spend our time the way we choose.
34- PRODUCTIVITY over ACTIVITY. Being productive and being active are not the same thing. Being productive at work and leaving to enjoy your life is far greater than being “busy” at work all day and leaving zero time for yourself.
35- Instill positive things into your mind. Books, podcasts, & conversations beat TV, social media scrolling, and daydreaming. Positive inputs lead to positive outputs.
36- Respect other people’s points of view. Try to understand where they are coming from and why they think the way they do. There is more than one way to think and do things in life.
37- Being by yourself is powerful. Enjoy time alone… Enjoy your thoughts…
38- Everyone should have at least one activity they do for themselves, and themselves only. And never feel guilty about doing it. Whether it’s one hour every single day or 2 hours once a week. I prefer ice hockey and golf.
39- Success and failure are both slow processes. Either things are building up or things are gradually declining. Audit thigns regularly to stay on track.
40- You are never too old to start something new or adjust your course in life. Get focused!
41- Disciline is the best skill you can develop.
42- Be a good person and act in a way that feels right at all times. Non-negotiable. If you act a certain way because of how someone else acted, then you are letting them have control over you.
One for good luck: Have no regrets… Just lessons learned…
There it is… Grateful for another trip around the sun… Happy Birthday to me!
-Steve Gitter