Timothy Lutts has written about the Contrary Opinion Forum in past issues of Cabot Wealth Advisory, so I won’t go into all the details of this wonderful conference. Suffice to say that I’ve been to the conference a handful of times since I joined Cabot back in 1999, Tim has been more than 20 years in a row, and we both love the setting, the speakers and the friendly attitude among attendees. It really is a unique experience.
But I bring it up today because of … buttons. Every year for decades, the Forum has given out one or two lapel buttons that have a cute, catchy investing slogan, along with a generally simple illustration. At first, reading them just makes you smile or giggle. If you stop to think about them, however, there is much to be learned.
Anyway, Tim has been collecting these buttons for years, and now has more than 70 of them. A few years ago, he made a list of all the buttons he has collected. I came across that list a couple of days ago, and want to pass along a few of these sayings, along with the lessons any investor can learn from them. Without further ado …
“If It Is To Be It Is Up To Me” This is probably my favorite. The lesson here is to take things into your own hands and to be responsible for your actions; no one is going to do it all for you! I’m happy to make recommendations, but the fact is it’s going to be you that actually makes the decision to buy and sell a stock. And it has to be you that realizes your own strengths and weaknesses as an investor, and adjusts accordingly.
“Excitement is Highest as the Roller Coaster goes Over the Top” Cabot Founder Carlton Lutts loved this one; he actually wore it around on his jacket with some regularity. The lesson: When everyone’s excited, the market’s usually near a top, at least shorter-term.
“Live in Worry Lose in a Hurry” Worrying about everything is not compatible with making money in stocks. Worrying about everything really means a person doesn’t have confidence in himself, or his system (if he’s using a system at all). And that almost always leads to losses.
“Push Yourself Beyond Conflict and Complacency” One of the big problems many investors have is the inability to make a decision. Having a system and sticking to it forces you to make decisions, and hence, allows you to stay in gear with the market.
“Unexpected Events Occur Frequently” I should’ve harped on this a year ago! Every financial pundit will tell you that the market goes up 7% per year, blah blah blah. But the fact is, the market often makes big moves, and the so-called unexpected occurs a lot more frequently than is widely believed. Example: We just had two 50% bear markets in the past eight years, after just one in the prior 70!
“Patience Precedes Profits” You probably know that letting winners run is a good strategy. But this saying also applies to the time before you buy a stock–the patient investor who waits for the proper environment, both for the market as a whole as well as a good buy point for an individual stock, is far more likely to make money than someone who’s always in a rush.
Like I wrote above, there are dozens more of these buttons, and in the future, we might even scan them into a computer and write about them somewhere on our Web site. But for now, these are my favorites. Refer to them often when emotions are running high!