🌊ride that wave 🌊
|Oct 9, 2018|
Welcome to Better Have My Money, my Monday night newsletter about stocks for clueless newbies aka all of us (and if not, this newsletter probably isn't for you), who are trying to figure out the world of investing in stocks. Better Have My Money is a gif-filled rundown of the stock market, from why we should care about shares when the world is burning, to thinking about the market like it's a bad boyfriend and figuring out how to keep our investments as diverse as the people around us.
I went to Hawai'i for 8 days and took a vacation from all aspects of my life, including this dear newsletter. While I spent about an hour feeling guilty about missing it, I felt utterly relaxed for a couple of hundred hours — and occasionally tired from hiking to waterfalls and learning to surf — so it was a good trade.
While I was away, the market kept dropping. Trump'snewest round of tariffs hit, affecting consumer goods. The S&P 500 hadtwo weeks of negative growth. People are worried about interest rates rising. Plus, of course, it's earnings season.
I'd wake up, and thanks to the time difference (Oahu is six hours behind New York), the stock market would be nearly closed. I'd open up my accounts, see my money drop and then quickly close the apps. Figured I'd just ride it out, right?
This week I found a book on my bookshelf (someone has loaned me this book... I have no idea who... please reveal your identity) that was helpful to read as a contrast to the sell-offs I was seeing happen in my stocks, which were making me wonder if I should be worrying.
The book is called "Enough" and it's by John C. Bogle, who founded the Vanguard Mutual Fund Group and created the first indexed mutual funds. It's all about how basically people who work in finance are really greedy and not to be trusted because they'll just get rich off the fees they charge you (even though yes it written by a rich finance guy) and they won't get you big wins. It also looks at why you can't always trust history and what actually drives the day-to-day movements of the market.
I thought this paragraph, from page 52, under the heading "A Giant Distraction," was a clear illustration.
When our market participants are largely investors, focused on the economics of business, the underlying power of our corporations to earn a solid return on the capital invested by their owners is what drives the stock market, and volatility is low. But when our markets are driven, as they are today, largely by speculators, by expectations, and by hope, greed, and fear, the inevitably counterproductive swings in the emotions of market participants — from the ebullience of optimism to the blackness of pessimism — produce high volatility, and the resultant turbulence that we are now witnessing became almost inevitable.
Confusing term of the week: "speculators" — people who try and predict the movements of the market and make short-term buys and sells off those predictions in days/weeks/months, rather than trying to hold them for years.
Now I don't think I'm really an "investor" focused on the economics of business, but it did make me think I did not want to be only fueled with "hope, greed and fear" and to keep shares for the long-term.
The whole premise of the book rests on this delicious little opening anecdote about being greedy (and also the trouble with trying to get rich off writing):
At a party given by a billionaire on Shelter Island, Kurt Vonnegut informs his pal Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch-22 over its whole history. Heller responds, "Yes, but I have something he will never have... enough."
What is enough for you? Plz reply and tell me! Do you have a dollar figure? Or some indication of what that means: a house you own? Student debt all paid off? Enough savings to quit your job and live for 6 months? The capacity to donate 50% of your income to causes you believe in?
Today is Indigenous Peoples' Day here in the United States. May I suggest you donate some of your speculation money instead to the Native American Rights Fund, which provides legal assistance to Native Americans. It feels particularly relevant on the day a new Supreme Court Justice was sworn in, despite multiple sexual allegations against him.
I don't know exactly what is "enough" for me, but I'm definitely very pleased at how even just focusing on shares in the last 10 months and writing this newsletter has resulted in me having invested thousands of dollars and making me feel like if the media industry collapses, at least I will have some money to get me through.
Here's a check-in on my shares:
And yeah, despite the last few weeks of the market, I'm still up 20% overall for now (these shares have all been purchased between Jan-August 2018).
From James, via email: "Thanks so much for your email! I've been reading it for months and psyching myself up to start trading, and then I realised when I tried to sign up that Robin Hood isn't available in Australia :( :( :( — James, I found an app called Stake, which lets you buy and trade US stocks in Australia with $0 fees per transaction (there are some costs association)
So you will notice a new Apple share there in my collection. That's thanks to reader Cassidy (lady I owe you a drink!), who used my referral code when she opened a Robinhood account, an app which lets you buy and sell stocks with zero fees. We both got a free share, mine was Apple. Cassidy what was yours? Usually I get like a Sprint or a Zynga or Groupon share worth just a few bucks, so this was a real step up, like trying an iPod after years of carrying around a discman.
To clarify, although the share was free, I'm only counting the increase from its worth when I received it (which was $222), otherwise it'll make me seem much better at investing than I am.
Cause akin to how I felt like an expert at surfing after a one-hour lesson but then couldn't walk the next day because I was so bruised, I am just trying to stay on the wave OK.
Better Have My Money is on Twitter @bhavemymoney, so please tweet nice things (aka the link to our sign up page) and tag us. Got a mate who wants to be old and rich? Forward this onto them and tell them to subscribe.
As always, if you've got any questions about stocks, this is a shame free zone. Just reply and ask away.