Comments on: Rethinking Investing – Part 2 (Plus: Election Thoughts) http://www.fourhourworkweek.com/blog/2008/11/03/rethinking-investing-part-2-plus-election-thoughts/ Tim Ferriss's 4-Hour Workweek and Lifestyle Design Blog Thu, 09 Feb 2012 12:39:38 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: brett http://www.fourhourworkweek.com/blog/2008/11/03/rethinking-investing-part-2-plus-election-thoughts/comment-page-1/#comment-90997 brett Thu, 17 Feb 2011 18:53:21 +0000 http://www.fourhourworkweek.com/blog/?p=789#comment-90997 I have two comments here. 1st- You can't be a Warren Buffett devotee and an efficient market theory proponent. They are opposite in nature. Buffett is a value guy who believes that the market is not efficient. He buys stock when the market prices it inefficiently. The reason he said to buy index funds was in response to your statement that you couldn't be a fulltime investor. I agree with this point, but only because you wouldn't have the time to do adequate research on a company, not because the market is efficient and you can never beat "the man". Buffett=value. EMH=indexing. If you can't allocate your time to investing like Buffett, index funds give you the average market returns. 2nd-Concerning the election and getting out to vote, I see two sides to this argument. On the one side, I agree with you that by voting, we keep a democratic process alive, something that we all take for granted. On the other side, most people do not do adequate research on a particular candidate so I see problems in voting for, or supporting a particular agenda that one has not done appropriate reseach on. A very glaring example is the Howard Stern radio segment where his guys approached people on the street and asked how they liked the Obama/Palin ticket or the Mccain/Biden ticket. People simply follow the herds and like lemmings to the ocean(a misconception but you get the point), vote or support a cause because everyone around them is too. Yes, write an article about the importance of elections, but please emphasize the research into a candidate more than simply voting because "Obama will pay my gas and mortgage", or Obama wasn't born in America, so I'm voting for Mccain. These people would do better to not vote. I have two comments here.
1st- You can’t be a Warren Buffett devotee and an efficient market theory proponent. They are opposite in nature. Buffett is a value guy who believes that the market is not efficient. He buys stock when the market prices it inefficiently. The reason he said to buy index funds was in response to your statement that you couldn’t be a fulltime investor. I agree with this point, but only because you wouldn’t have the time to do adequate research on a company, not because the market is efficient and you can never beat “the man”. Buffett=value. EMH=indexing. If you can’t allocate your time to investing like Buffett, index funds give you the average market returns.
2nd-Concerning the election and getting out to vote, I see two sides to this argument. On the one side, I agree with you that by voting, we keep a democratic process alive, something that we all take for granted. On the other side, most people do not do adequate research on a particular candidate so I see problems in voting for, or supporting a particular agenda that one has not done appropriate reseach on. A very glaring example is the Howard Stern radio segment where his guys approached people on the street and asked how they liked the Obama/Palin ticket or the Mccain/Biden ticket. People simply follow the herds and like lemmings to the ocean(a misconception but you get the point), vote or support a cause because everyone around them is too. Yes, write an article about the importance of elections, but please emphasize the research into a candidate more than simply voting because “Obama will pay my gas and mortgage”, or Obama wasn’t born in America, so I’m voting for Mccain. These people would do better to not vote.

]]> By: Kumbie http://www.fourhourworkweek.com/blog/2008/11/03/rethinking-investing-part-2-plus-election-thoughts/comment-page-1/#comment-55246 Kumbie Mon, 26 Oct 2009 19:41:40 +0000 http://www.fourhourworkweek.com/blog/?p=789#comment-55246 Investing = “Allocating resources to improve quality of life.” Staying true to that quote will minimizes ones exposure to the risk of collective ignorance. That quote puts into context the true essence of lifestyle design. I have transformed my practice and continue to transform my practice to focus on helping my clients allocate their resources to improve their quality of life. I am in the process of doing so myself and if there are any resources in addition to your book that you can suggest, they would be gratefully appreciated. Sincerly, Kumbie Investing = “Allocating resources to improve quality of life.”

Staying true to that quote will minimizes ones exposure to the risk of collective ignorance.

That quote puts into context the true essence of lifestyle design. I have transformed my practice and continue to transform my practice to focus on helping my clients allocate their resources to improve their quality of life.

I am in the process of doing so myself and if there are any resources in addition to your book that you can suggest, they would be gratefully appreciated.

Sincerly,
Kumbie

]]> By: Josh Moore http://www.fourhourworkweek.com/blog/2008/11/03/rethinking-investing-part-2-plus-election-thoughts/comment-page-1/#comment-44458 Josh Moore Wed, 22 Jul 2009 14:30:07 +0000 http://www.fourhourworkweek.com/blog/?p=789#comment-44458 Hi Tim, Great thoughts and insights into an often complex subject. Personally, my bosses, mentors and myself are actively involved in startups as our main source of business activity. Many of them seem to be involved in more than one (usually in similar fields or industries however) which is how diversity occurs. Cash flow generated from business activities is allocated and invested in one of three ways: 1: Back into the businesses, or in starting new opportunities (if the number of involvements is manageable) 2: In reducing living expenses and increasing simplicity. 3: In building cash savings (most liquid). Long term investments and capital growth is achieved by building a share portfolio surrounding these ventures, each of which has a plan and a planned exit. The concept (as explained by one of my mentors) works as follows: "We are actively involved as investors in startups, where we invest time, effort and experience into the business rather than capital (aka Entrepreneurs and Advisers). These businesses are high risk businesses, so any cash flow taken from them is best stored into low risk, high liquidity options for future use and survival during lean times." Investing in yourself is highly recommended, and many of my bosses heavily invest in education (both formal, informal and ongoing learning). This ties in efficiently with the principle of having an information advantage. If you are continuing to learn in your field and have studied and applied more than your peers, your chances of success are much higher. I wouldn't recommend this path for everyone, but since it is something I am continuing to educate myself in and enjoy, I find it a rather viable option for my long term success. Hi Tim,

Great thoughts and insights into an often complex subject.

Personally, my bosses, mentors and myself are actively involved in startups as our main source of business activity. Many of them seem to be involved in more than one (usually in similar fields or industries however) which is how diversity occurs.

Cash flow generated from business activities is allocated and invested in one of three ways:
1: Back into the businesses, or in starting new opportunities (if the number of involvements is manageable)
2: In reducing living expenses and increasing simplicity.
3: In building cash savings (most liquid).

Long term investments and capital growth is achieved by building a share portfolio surrounding these ventures, each of which has a plan and a planned exit.

The concept (as explained by one of my mentors) works as follows:

“We are actively involved as investors in startups, where we invest time, effort and experience into the business rather than capital (aka Entrepreneurs and Advisers). These businesses are high risk businesses, so any cash flow taken from them is best stored into low risk, high liquidity options for future use and survival during lean times.”

Investing in yourself is highly recommended, and many of my bosses heavily invest in education (both formal, informal and ongoing learning).

This ties in efficiently with the principle of having an information advantage. If you are continuing to learn in your field and have studied and applied more than your peers, your chances of success are much higher.

I wouldn’t recommend this path for everyone, but since it is something I am continuing to educate myself in and enjoy, I find it a rather viable option for my long term success.

]]> By: Taking Control of Your Investments | Maclennan Investment Group http://www.fourhourworkweek.com/blog/2008/11/03/rethinking-investing-part-2-plus-election-thoughts/comment-page-1/#comment-37649 Taking Control of Your Investments | Maclennan Investment Group Fri, 08 May 2009 23:07:29 +0000 http://www.fourhourworkweek.com/blog/?p=789#comment-37649 [...] in the stock market resembles letting go of the wheel. You have surrendered control of your money to the whims of the market and [...] [...] in the stock market resembles letting go of the wheel. You have surrendered control of your money to the whims of the market and [...]

]]> By: Tim Ferriss http://www.fourhourworkweek.com/blog/2008/11/03/rethinking-investing-part-2-plus-election-thoughts/comment-page-1/#comment-37575 Tim Ferriss Thu, 07 May 2009 22:32:10 +0000 http://www.fourhourworkweek.com/blog/?p=789#comment-37575 Hi August, Forex trading is very fascinating and very addictive, which is part of the reason I've avoided it to date. It's true you can make some serious gains in short periods of time, but the flipside is that you can also use leverage to get yourself in a hole you lack the capital to dig yourself out of. Dopamine is great, but addiction to any behavior can spell poor decision-making. I've been there with some of my projects, and it's important to be aware of the validation/excitement addiction all of us are prone to with different activities. Tim Hi August,

Forex trading is very fascinating and very addictive, which is part of the reason I’ve avoided it to date. It’s true you can make some serious gains in short periods of time, but the flipside is that you can also use leverage to get yourself in a hole you lack the capital to dig yourself out of.

Dopamine is great, but addiction to any behavior can spell poor decision-making. I’ve been there with some of my projects, and it’s important to be aware of the validation/excitement addiction all of us are prone to with different activities.

Tim

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