Will Rogers said that investing in the stock market is easy.  You buy a stock and when it goes up you sell at a profit. If the stock doesn’t go up, don’t buy it in the first place.

Drum roll, please.

On a more realistic note, I’d like to briefly and simply explain why you should aim to avoid large investment losses.

Suppose you take $10,000 and make five investments of $2,000 each.  At the end of the first year four of your investments have each increased by 15%, which is quite good.  Your total profit on that $8,000 investment is $1,200 (15% of $8,000).  So far so good.  Congratulations!

But on that final investment of $2,000 you took a flier.  Maybe you invested in a speculative stock, or in a friend’s business.  But at the end of the first year your investment has declined by 80%, which is $1,600.  Oops!

So you made four excellent investments and one bummer.  Your profit in four investments was $1,200 but your single loss on one was $1,600.  What is the total profit (or loss) on your $10,000 portfolio?  You’re probably way ahead of me even if you’re not ahead on your investments.  Your net loss was $400 ($1,200 profit minus a $1,600 loss).  This is a recipe for going broke in a hurry.

Accordingly, I suggest that, when you invest, avoid swinging for home runs.  You won’t score if you consistently strike out.  Consistent singles are more profitable.

Three additional easy to understand investment rules, that I have learned the hard way.

1. Do not under any circumstances invest in the business of a friend or relative. If you’re tempted, give them a gift instead and save both money and the relationship.
2. Don’t entirely trust money managers who invest in stocks. They are in business to make money from your money.  For themselves.  I once turned $30,000 in the stock market into $20,000.  Then I hired a professional money manager, who turned my $20,000 into $10,000.  I only lost 33-1/3% on my money.  The professional was more efficient and lost 50% of what remained.
3. Invest in yourself – take classes, travel, read books that interest you. Those investments pay off handsomely.

If you don’t understand what I’m talking about, then by all means read more Will Rogers.

Alan

“Patterns Persist” is the title of Chapter 7 of my New York Times bestselling book People Tools.  It’s my favorite chapter, and is also the one that many readers find most useful, and they often share examples from their own lives.

The idea is simple. If you find yourself, or anyone else in your life, repeating a behavior, expect that pattern to continue.

When is this particular People Tool helpful?  Every day.

For example, when I was twenty-one my father said to me, “Alan, when you marry, don’t expect your wife to change.  If you go into marriage expecting her to change her core beliefs or set behaviors in any meaningful way you are setting yourself up for disappointment as time goes on and she remains the same.”

I was twenty-one, so I ignored his advice.  From my perspective my father didn’t know much then, and it wasn’t until I was almost thirty that I realized he had learned a great deal. Even so, I remembered his advice and after seven years of marriage I finally made good use of it.

By then, my wife and I had been fighting almost continuously for three years, always about the same issue.  I believe that when you’re married, or in a committed relationship, you support your partner no matter what.  Her position was that you support whoever you think is in the right, and in her mind, that wasn’t me.  I found this untenable. Imagine being asked what you did to provoke the bully on the playground to beat you up, rather than being supported?”

One night we were having the same fight for the umpteenth time and I thought, “This woman is not going to change. She is going to be exactly the same for the rest of her life.”  Then I asked myself, “Is that okay with me?”

My instant answer was, “No.”  So I packed my suitcase and left.  That was forty-eight years ago, almost to the day.  I’m delighted to report that she has been happily remarried for many years. But I hear that she still holds to the position that caused us problems so many years ago.

I’m even happier to report that in my current relationship, Daveen and I support each other unconditionally, no matter what.

I also know that when one is absolutely committed to it, established patterns can change.  It’s possible.  I no longer eat four or five slices of bread at a restaurant before anything else is even served.  As a result I’m sixty pounds lighter than I was six years ago.

What I’m working on now is exercise.  My son the doctor says that if I want to stay healthy I have to seriously exercise at least six days a week.  He tells me that when you’re seventy-nine it takes more time to get fit, and to remain fit you have to exercise every day.

I‘m sure he’s right.  So after years of being the consummate couch potato I’ll see if I can establish a new pattern – taking at least one brisk walk a day for a minimum of twenty minutes.  Maybe listening to books on tape will help.

Can this old dog learn this new trick?  In a few months we’ll both find out.  Although, if another pattern of mine persists, I’m more likely to share with you the good news only if I succeeded, rather than the bad news if I didn’t.  Maybe this is an opportunity for me to change that pattern as well.

We’ll see.

Alan

This is the title of a popular song from a number of years ago. If you look online you can watch Bobby McFerrin’s Official Video. It has had more than 145 million views. That’s a lot of people being happy, or at least wanting to be.

I am a pragmatist, which means I’m always thinking about practical ways to implement good ideas.

For many years I have tried to live accordingly. Whenever I start to worry about something, I ask myself the question:  “Can I do anything about this right now?”  If I can, I do.  If not – then I immediately stop worrying.  This might sound impossible, but everyone can do it with practice.  And if you can’t do it perfectly – don’t worry.  Even a little more happiness is a blessing.

Many years ago I woke up at 4:30 am worrying about a business problem.  It bothered me a lot, but I realized that I actually could do something about it. So I climbed out of bed, got ready for work, and drove to my office in the dark.  As it turned out, an hour later one of my apartment managers called the office to leave me a message about the same problem. She was startled when I answered the phone at 5:45 am.  Together we were able to work out a solution.  I stopped worrying.

My dad had a theory that we should not allow our bodies to experience stress below the neck.  When I was with him he seemed to be in a good mood virtually all of the time.  He also ate whatever he wanted (and his favorite restaurant was a buffet). Since he lived to be 104, perhaps he was on to something.

I have a friend Betsy who worries much of the time.  If a doctor performs tests and doesn’t call her within a few hours she assumes she is going to die.  For Betsy, and many others, worrying, and expecting the worst, is a way of life, and changing this pattern will take time and practice.  One technique is to “change the subject” in your mind and instead of worrying (when you can’t do anything about it) remind yourself of a pleasant experience, or something you are grateful for.  Recent research clearly shows that feeling gratitude is one of the best and most reliable ways to feel happy.

I’ll confide to you that early this morning I began to worry about completing my blog in time to post it.  So I took action – I began to write.  Now that problem is solved – at least for the time being.

Of course, there is always next week…

Alan