My Letter to My Nieces – December 2018
“I’m Gonna Sit Right Down and Write Myself a Letter”
Lyrics by Fred E. Ahlert May 8, 1935
This month’s newsletter isn’t so newsy. It is a letter to my nieces about investing. Both of my nieces opened brokerage accounts this year and bought a little stock.
Since my whole premise with The Modest Economist is about helping women invest, I thought I should explain to them that stock prices do go down. 2018 will end with stock prices lower than they were at the beginning of the year.
Although I would like to sit down with them, we are not geographically close, so I am resorting to the old letter writing technique of communication.
28 December 2018
Dear Nieces,
This year you opened brokerage accounts – what a huge step!
You did research on companies you were interested in.
You looked for stocks that were in your price range, so that you did not risk a big percentage of your money in one or two stocks.
You figured out how to buy and sell stock – amazing that you did this own your own! Born traders! I love it.
You watched the prices of your stocks go up and down, mostly down.
You did everything right.
Don’t be discouraged. You will see over time how your investments will grow, even with the mercurial nature of the markets.
Investing takes patience. Keep doing exactly what you have started doing. A little bit at a time.
When stock prices go down, don’t make it personal. You did not make a mistake. I can’t say that every stock in the universe lost value this year, but it sure seems like it.
Here is my worst trade of the year. I bought a stock at $14.85 per share. It is now trading at $2.50!
So now I wait. This sucker is either going to go belly up or, slowly regain value. I didn’t invest very much, so if I lose the entire investment, I won’t like it, but I can live with it. I don’t feel bad about it at all.
Investing does not require a special talent. There is no genome for investing.
Honestly, how many of your friends have their own brokerage accounts and have traded stock? You have a head start that many of us wish we had.
Nothing can replace hands on experience . Investing is a learning process. You will learn by doing.
Follow your passions. I don’t expect everyone to be as passionate about investing as I am.
At the same time, I don’t spend every day trying to “figure out” what is happening in the markets. I don’t make sudden changes in my portfolio based on news. The best path is to stay on course especially during a year like 2018.
Sadly, the one thing I do look at daily are Treasury yields. I look at Treasury yields the same way I look at the weather. The yield curve is like a weather vane. It gives me a sense of direction for the economy.
Sometimes direction is more important than prediction. No one can accurately predicate what is going to happen. No one. The most brilliant minds on Wall Street have been wrong, more than once.
If you are thinking, “if they were so brilliant and got it wrong how can I win?”
I say, be the turtle. Plodding along is fine. Step by step will get you to your goals. Investing is about consistency, not brilliance.
Some of the best investment ideas come from observing the world around us.
Finally, I want to share with you a poem that I have carried around in my wallet for over 30 years.
It isn’t a poem about investing per se and certainly you are a long way from “surrendering the things of youth.”
It is a poem that reminds me to keep a healthy perspective in life. Having a healthy perspective always helps when “the markets” misbehave. And they will.
I am SO proud of you !
Love,
Tita
Desiderata
By Max Ehrmann
Go placidly amid the noise and haste,
and remember what peace there may be in silence.
As far as possible without surrender
be on good terms with all persons.
Speak your truth quietly and clearly;
and listen to others,
even the dull and the ignorant;
they too have their story.
Avoid loud and aggressive persons,
they are vexations to the spirit.
If you compare yourself with others,
you may become vain and bitter;
for always there will be greater and lesser persons than yourself.
Enjoy your achievements as well as your plans.
Keep interested in your own career, however humble;
it is a real possession in the changing fortunes of time.
Exercise caution in your business affairs;
for the world is full of trickery.
But let this not blind you to what virtue there is;
many persons strive for high ideals;
and everywhere life is full of heroism.
Be yourself.
Especially, do not feign affection.
Neither be cynical about love;
for in the face of all aridity and disenchantment
it is as perennial as the grass.
Take kindly the counsel of the years,
gracefully surrendering the things of youth.
Nurture strength of spirit to shield you in sudden misfortune.
But do not distress yourself with dark imaginings.
Many fears are born of fatigue and loneliness.
Beyond a wholesome discipline,
be gentle with yourself.
You are a child of the universe,
no less than the trees and the stars;
you have a right to be here.
And whether or not it is clear to you,
no doubt the universe is unfolding as it should.
Therefore be at peace with God,
whatever you conceive Him to be,
and whatever your labors and aspirations,
in the noisy confusion of life keep peace with your soul.
With all its sham, drudgery, and broken dreams,
it is still a beautiful world.
Be cheerful.
Strive to be happy.
Max Ehrmann, Desiderata, Copyright 1952.
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