The pain of a failed investment can be the best teacher of all – Financial Post
Posted: November 28, 2019 at 7:43 am
During Ronald Reagans second U.S. presidential debate with Walter Mondale in October 1984, the former movie star was asked about his age he was 73 and whether he would be able to handle the rigours of the toughest job in the world.
The oldest president in U.S. history responded: I want you to know that also I will not make age an issue of this campaign. I am not going to exploit, for political purposes, my opponents youth and inexperience.
Brilliant. Even Mondale had to laugh.
Top tennis players typically reach their highest levels of performance at age 24, (although Roger Federer and Rafael Nadal are making a strong argument that it can be past 30).
For baseball, the peak age is 28, the same for long distance runners. Its three years older for golf. For table tennis its 17 years. Its all downhill after that.
So, whats the peak performance age for investors? Well, there are a number of great investors who are still going strong in their golden years. Warren Buffett, the CEO of Berkshire Hathaway and one of the richest men in the world, is 89. His right-hand man, Charlie Munger, is 95.
There are others who were even older. Phil Carret, one of Buffetts role models and the founder of one of the first mutual funds in the U.S., was still investing when he died at 101. Irving Kahn, an early disciple to Benjamin Graham, a.k.a. the father of value investing, was the worlds oldest active investor when he passed away in 2015 at the age of 109. Interestingly, all of the them are (or were) value investors.
There seems to be no age limit, barring cognitive impairment or other ailments, that hampers ones ability to be a great investor.
Great investing has nothing to do with getting older. In fact, its quite the opposite. I asked Carret at a Berkshire Hathaway meeting many years ago to what he owed his longevity. He thought for a moment and said, Well, I never smoked, I drink in moderation and I dont worry about anything.
I believe its the latter element that was the most important. All of these aforementioned investors had the ability to block out short-term market gyrations and not be upset by them. In fact, they saw big drops or even collapses in stock prices as something to celebrate and they saw them many times during their careers.
Age gives you something that the young simply cant have experience and mistakes. Consider the thoughts of Thomas Edison, inventor of the light bulb.
I have not failed 10,000 times. I have not failed once. I have succeeded in proving that those 10,000 ways will not work. When I have eliminated the ways that will not work, I will find the way that will work, he said.
Those who have never experienced large market declines are at a distinct disadvantage to those who have. Many investors today dont even remember the near-collapse in 2008, the bear market of 2000 to 2002 or the white-knuckle abyss of 1987.
Investors who have been around a few years possess the huge advantage of having lived through both bull and bear markets. They have witnessed the wild elation of investors throwing rational thought to the wind and paying ridiculously high prices for businesses. They have also seen their despair at the opposite end of the investing spectrum when selling their holdings for rock-bottom values. Reading the history of such events is one thing. Living through the real-world behaviour of Mr. Market, the imaginary investor in Grahams 1949 book, The Intelligent Investor, is something else altogether.
Experience is invaluable in investing. Yes, having the right education is essential. Studying economics, accounting and mathematics helps to build an important foundation. But the classroom is light years away from the ultra-competitive and cut-throat real world of investing.
In that arena, my mistakes have taught me way more than my successes. The pains of losses are incredibly great teachers.
What do you learn from mistakes? Well, you do not want to do them ever again. For example, buying into a value trap or owning a company run by a bunch of crooks can feel like getting hit in the head by a brick. Paying far too much for a business, even a good one, can be another path to pain and learning the hard way.
So, what are the young investors who have never experienced these long-term events to do?
One suggestion: Read the history of markets. There are many great books that have been written about market manias, the subsequent panics and human behaviour.
This Time is Different: Eight Centuries of Financial Folly by Carmen Reinhart and Kenneth Rogoff and A Short History of Financial Euphoria by John Kenneth Galbraith are two of the best. The latter is a delightfully, entertaining short history of market madness through the ages. For a deeper understanding of the 1920s, Galbraiths brilliant book, The Great Crash 1929, is also essential reading.
Otherwise, you will live the horror of what Galbraith reportedly said many years ago the old generation has to die off so a new set of idiots can make the same mistakes all over again.
Larry Sarbit is a Portfolio Manager at Value Partners Investments in Winnipeg.
Link:
The pain of a failed investment can be the best teacher of all - Financial Post
- SoundCloud Gets Investment From Union Square, Index [Last Updated On: January 9th, 2011] [Originally Added On: January 9th, 2011]
- Return On Investment (ROI) Definition | Investopedia [Last Updated On: September 14th, 2015] [Originally Added On: September 14th, 2015]
- Investing News - Investment Articles - Investing Research [Last Updated On: September 14th, 2015] [Originally Added On: September 14th, 2015]
- InvestmentNews - The Investing News Source for Financial ... [Last Updated On: September 14th, 2015] [Originally Added On: September 14th, 2015]
- Investment management - Wikipedia, the free encyclopedia [Last Updated On: September 14th, 2015] [Originally Added On: September 14th, 2015]
- Investment - Wikipedia, the free encyclopedia [Last Updated On: September 14th, 2015] [Originally Added On: September 14th, 2015]
- Investment Education & Advice for Investors - Investment U [Last Updated On: September 14th, 2015] [Originally Added On: September 14th, 2015]
- Forbes - Investing Information and Investing News - Forbes.com [Last Updated On: September 15th, 2015] [Originally Added On: September 15th, 2015]
- Fidelity Investments - Retirement, Funds, and Online Trading [Last Updated On: September 15th, 2015] [Originally Added On: September 15th, 2015]
- Investment | Define Investment at Dictionary.com [Last Updated On: September 15th, 2015] [Originally Added On: September 15th, 2015]
- Investment Definition | Investopedia [Last Updated On: September 15th, 2015] [Originally Added On: September 15th, 2015]
- Find what type of investment is right for you - INVESTMENTS [Last Updated On: September 15th, 2015] [Originally Added On: September 15th, 2015]
- Investopedia - Educating the world about finance [Last Updated On: September 20th, 2015] [Originally Added On: September 20th, 2015]
- Investment, Mutual Funds, ETFs & Stocks | Bankrate.com [Last Updated On: September 26th, 2015] [Originally Added On: September 26th, 2015]
- Gold as an investment - Wikipedia, the free encyclopedia [Last Updated On: October 4th, 2015] [Originally Added On: October 4th, 2015]
- Green Card Through Investment | USCIS [Last Updated On: January 22nd, 2016] [Originally Added On: January 22nd, 2016]
- What is Investment ? Meaning and Types of Investment [Last Updated On: January 22nd, 2016] [Originally Added On: January 22nd, 2016]
- Host.al - Albanian Domain AL Accredited Registrar [Last Updated On: January 22nd, 2016] [Originally Added On: January 22nd, 2016]
- Alpha Investment Plan - Alpha Bank Albania [Last Updated On: January 22nd, 2016] [Originally Added On: January 22nd, 2016]
- RealEstate.al - Apartment-Villa-Office For rent or for sale ... [Last Updated On: January 22nd, 2016] [Originally Added On: January 22nd, 2016]
- Attractiveness of foreign investments in Albania [Last Updated On: January 22nd, 2016] [Originally Added On: January 22nd, 2016]
- INVESTMENT CLIMATE | Embassy of the Republic of Albania in Japan [Last Updated On: January 22nd, 2016] [Originally Added On: January 22nd, 2016]
- Princip.al :: Welcome to Princip.al [Last Updated On: January 22nd, 2016] [Originally Added On: January 22nd, 2016]
- Foreign direct investment - Wikipedia, the free encyclopedia [Last Updated On: January 22nd, 2016] [Originally Added On: January 22nd, 2016]
- Investment Moats Wealth Mentor for Financial Independence [Last Updated On: January 22nd, 2016] [Originally Added On: January 22nd, 2016]
- Investment | Nicole Gesmondi Photographer, LLC [Last Updated On: January 22nd, 2016] [Originally Added On: January 22nd, 2016]
- investment - Thesaurus.com [Last Updated On: January 22nd, 2016] [Originally Added On: January 22nd, 2016]
- What is Investment? | eHow [Last Updated On: January 22nd, 2016] [Originally Added On: January 22nd, 2016]
- Investment banking - Wikipedia, the free encyclopedia [Last Updated On: January 22nd, 2016] [Originally Added On: January 22nd, 2016]
- Investment Jobs on CareerBuilder.com [Last Updated On: January 22nd, 2016] [Originally Added On: January 22nd, 2016]
- Articles about Investment - timesofindia-economictimes [Last Updated On: January 22nd, 2016] [Originally Added On: January 22nd, 2016]
- Investment Definition - What is Investment? [Last Updated On: January 22nd, 2016] [Originally Added On: January 22nd, 2016]
- Investing Basics | Investor.gov [Last Updated On: January 22nd, 2016] [Originally Added On: January 22nd, 2016]
- Investing.com - Stock Market Quotes & Financial News [Last Updated On: January 22nd, 2016] [Originally Added On: January 22nd, 2016]
- Best Investments Good Investments in 2015 and Beyond [Last Updated On: January 22nd, 2016] [Originally Added On: January 22nd, 2016]
- Investment Calculators [Last Updated On: January 22nd, 2016] [Originally Added On: January 22nd, 2016]
- Investment: a key concept in Economics [Last Updated On: January 22nd, 2016] [Originally Added On: January 22nd, 2016]
- SEC.gov | Investment Companies [Last Updated On: January 22nd, 2016] [Originally Added On: January 22nd, 2016]
- Careers-in-Investment-Banking.com: Your Guide to ... [Last Updated On: February 8th, 2016] [Originally Added On: February 8th, 2016]
- Investment Property and Investment Real Estate For Sale [Last Updated On: February 8th, 2016] [Originally Added On: February 8th, 2016]
- Investment and Sustainable Development [Last Updated On: February 16th, 2016] [Originally Added On: February 16th, 2016]
- Investment Images - Photos - Pictures - CrystalGraphics [Last Updated On: February 16th, 2016] [Originally Added On: February 16th, 2016]
- Investment - Simple English Wikipedia, the free encyclopedia [Last Updated On: February 20th, 2016] [Originally Added On: February 20th, 2016]
- Types of Investments - MoneySENSE [Last Updated On: February 20th, 2016] [Originally Added On: February 20th, 2016]
- Smart Ways to Invest Your Money and Minimize Risks [Last Updated On: February 22nd, 2016] [Originally Added On: February 22nd, 2016]
- Investing in Mining Stocks, Metals and Commodities ... [Last Updated On: February 22nd, 2016] [Originally Added On: February 22nd, 2016]
- What is Investment Banking? (with picture) [Last Updated On: February 22nd, 2016] [Originally Added On: February 22nd, 2016]
- Investments - The New York Times [Last Updated On: March 17th, 2016] [Originally Added On: March 17th, 2016]
- investment - English-Spanish Dictionary - WordReference.com [Last Updated On: March 20th, 2016] [Originally Added On: March 20th, 2016]
- Investment fund - Wikipedia, the free encyclopedia [Last Updated On: March 20th, 2016] [Originally Added On: March 20th, 2016]
- What Is An Investment Bank - An Intro To Investment Banks [Last Updated On: May 10th, 2016] [Originally Added On: May 10th, 2016]
- Investment Property Advisors - Home [Last Updated On: May 10th, 2016] [Originally Added On: May 10th, 2016]
- Investment Savings Bank [Last Updated On: May 10th, 2016] [Originally Added On: May 10th, 2016]
- US Investment Report [Last Updated On: May 10th, 2016] [Originally Added On: May 10th, 2016]
- Investment House [Last Updated On: May 10th, 2016] [Originally Added On: May 10th, 2016]
- Best investments - 10 steps to investing money | uSwitch [Last Updated On: May 17th, 2016] [Originally Added On: May 17th, 2016]
- investment - The Motley Fool [Last Updated On: May 17th, 2016] [Originally Added On: May 17th, 2016]
- How to Invest Small Amounts of Money Wisely: 12 Steps [Last Updated On: May 17th, 2016] [Originally Added On: May 17th, 2016]
- Investing with us | HSBC UK [Last Updated On: May 17th, 2016] [Originally Added On: May 17th, 2016]
- Investment Risks | Consumer Information [Last Updated On: June 27th, 2016] [Originally Added On: June 27th, 2016]
- Invest In Shipping Containers | Invest Containers [Last Updated On: July 1st, 2016] [Originally Added On: July 1st, 2016]
- Investment - Trade - European Commission [Last Updated On: July 10th, 2016] [Originally Added On: July 10th, 2016]
- investment | finance | Britannica.com [Last Updated On: August 15th, 2016] [Originally Added On: August 15th, 2016]
- What does investment mean? definition, meaning and ... [Last Updated On: August 17th, 2016] [Originally Added On: August 17th, 2016]
- Investment Options | Investment Plans in India | Online ... [Last Updated On: August 17th, 2016] [Originally Added On: August 17th, 2016]
- Investment Returns [Last Updated On: August 17th, 2016] [Originally Added On: August 17th, 2016]
- The Mental Health Benefits of Exercise: The Exercise ... [Last Updated On: July 8th, 2017] [Originally Added On: July 8th, 2017]
- PayPal co-founder launches firm to raise investment funds for SpaceX, report says - Los Angeles Times [Last Updated On: July 30th, 2017] [Originally Added On: July 30th, 2017]
- Bitcoin Investment Vehicle Adopts Open Strategy Ahead of Blockchain Fork - CoinDesk [Last Updated On: July 30th, 2017] [Originally Added On: July 30th, 2017]
- How to Spot a Good Investment in a Changing Neighborhood - Mansion Global [Last Updated On: July 30th, 2017] [Originally Added On: July 30th, 2017]
- SoftBank Vision Fund investments so far - CNBC.com - CNBC [Last Updated On: July 30th, 2017] [Originally Added On: July 30th, 2017]
- Vanguard's new chief investment officer has a warning for investors - The Denver Post [Last Updated On: July 30th, 2017] [Originally Added On: July 30th, 2017]
- MARKET MATTERS: When life throws a curveball at your investment timeline - New Haven Register [Last Updated On: July 30th, 2017] [Originally Added On: July 30th, 2017]
- Investment prosperity can make investors complacent - The Seattle Times [Last Updated On: July 30th, 2017] [Originally Added On: July 30th, 2017]
- Risky business: Keeping an eye on Chinese investment - POLITICO.eu [Last Updated On: July 30th, 2017] [Originally Added On: July 30th, 2017]
- Somaliland secures record $442m foreign investment deal - CNN [Last Updated On: August 2nd, 2017] [Originally Added On: August 2nd, 2017]
- China isn't discouraging overseas investment, only regulating it, Beijing-backed think tanker says - CNBC [Last Updated On: August 2nd, 2017] [Originally Added On: August 2nd, 2017]
- China issues rules to curb state firms' overseas investment risks - Reuters [Last Updated On: August 2nd, 2017] [Originally Added On: August 2nd, 2017]
- Unilever's Latest Investment Targets New Route into Homes - Fortune [Last Updated On: August 2nd, 2017] [Originally Added On: August 2nd, 2017]
- Hundreds of jobs, $139 million investment planned in Morgan County by major companies - whnt.com [Last Updated On: August 2nd, 2017] [Originally Added On: August 2nd, 2017]