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« Five Ways to Make Good Career Decisions | Main | Reflecting on 2009 Returns Provides Lessons Going Forward »

January 26, 2010


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Great summary. One thing that I might add about the story is that it's actually a book excerpt written by Princeton professor Burton Malkiel and investor Charles Ellis. These guys are some of the major theorists behind what we know about stocks today.

MasterPo would add:

- Don't listen to "experts" on MSNBC, CNN, Fox Business etc. They know nothing more than you do.

- It follows from above that when you make a decision stick to it; Don't second guess yourself.

- If your decision works don't pat yourself too much on the back, as much as you think you made a good move chance played a big roll too; Similarly, if your decision turns out to be a bust don't beat yourself up either. Somethings you just can't control. And the market is far from rational.

ps- MasterPo agrees with #5 & #6.

Hi, I'm an anonymous internet reader fancying himself as a popular children's cartoon character about a penny-pinching crustacean...

and I approve of this message.

It's a myth that more money goes into the market at the top and less goes in at the bottom. By definition, money in and out of the market must be constant plus IOPs as there is always a buyer and a seller of each share of stock. It may be true that mutual funds see the biggest withdrawals at the bottom and the highest inflow at the top but someone has to be on the other side of the trade.

Whoops, I said that wrong. Money in the market obviously goes up when the share prices go up. However, sideline cash stays constant. Often times you will hear people erroneously say that there is a lot of cash on the sidelines in down markets but that is a myth.

Thoughts on the couch potato ... 10 speed?

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