Personal investing for smart people

[pjhaggerty]

Steve and others:

how would the ideas of steve's book apply to the world of investing? I'd love to hear some of your thoughts, anything anybody has to share.

Some of my thoughts:

several of the basic financial models around today, such as MPT and the CAPM suffer from serious misallignments with truth due to the inaccuracies of their basic assumptions about human behavior.

Much of the investing thought is out of alignment with oneness. This manifests as an individual vs. The Market mentality.

Most people who invest can do so out of alignment with the principle of authority by trusting their money to professionals who's investment theories they do not completely understand.

Does anybody have any other thoughts? Can the T L P model make us better investors?

[Requiem]

I think most smart people should invest their own money.

This is an era of over-specialization- you're supposed to learn how to make widgets and then hand over your money to people that supposedly know better than you what to do with it and then wonder why your 401(k) got crushed.

I focus on income investments with good returns- particularly dividend stocks.

[amurorei78]

I love the phrase from Warren Buffet, "Life is like a snowball, find a wet one and a really long hill". I think it greatly applies to what he is thinking & doing ie. investing. I did try to dissect this phrase from my point of view in my blog. Any pointers or blindspots would be greatly appreciated.

[MiketheTaxGuy]

This is a very thought provoking question. Although I haven't read Steve's book yet (it's on my shelf still), I am some what familiar with his teachings.

There are definitely inherent problems with all financial models, as any economist or stock market analyst would tell you. The problems are obvious if you attempt to use any model to try to fully understand or predict the markets. If there are problems with even the best models, then we have to move outside the normal economic/mathematical/statistical framework from which these models are built, which is exactly what you're asking us to do.

If I were to apply the TLP model to my personal finances, then I wouldn't even invest in the stock market. I would invest in businesses that I can understand, directly participate in, and directly contribute to. ...This is just my initial reaction, but I'll have to think more deeply about this.

[pjhaggerty]

Originally Posted by MiketheTaxGuy

This is a very thought provoking question. Although I haven't read Steve's book yet (it's on my shelf still), I am some what familiar with his teachings.

There are definitely inherent problems with all financial models, as any economist or stock market analyst would tell you. The problems are obvious if you attempt to use any model to try to fully understand or predict the markets. If there are problems with even the best models, then we have to move outside the normal economic/mathematical/statistical framework from which these models are built, which is exactly what you're asking us to do.

If I were to apply the TLP model to my personal finances, then I wouldn't even invest in the stock market. I would invest in businesses that I can understand, directly participate in, and directly contribute to. ...This is just my initial reaction, but I'll have to think more deeply about this.

That was my initial reaction as well. No stock market, no bond market, because there is no Authority. you have no control over it.

Some of the things that came to mind would be investing in residential real estate where you buy it fix it and rent it back out

Another thing would obviously be some kind of online business.

the problem for most of these businesses is that they require an investment of time and energy in addition to an investment of money. As flexible as they can be, they cannot compare to the ease of buying a bond and letting it mature 30 years later, collecting interest along the way. On the same note though, they also allow much more active participation as a way of creative self expression, which is nice.

It would seem like the TLP model would discourage 'passive' investments, like bonds annuities stocks (although stocks and bonds can get very active) etc. and encourage 'active' investments like building a business, actively helping people, renting out real estate, etc.

[MiketheTaxGuy]

You should just focus primarily on those activities that enjoy. If you find following the stock market more frustrating and worrisome than fun, then don't do it. If you find hunting for undervalued residential property that you can subsequently renovate and resell, then go for that. I guess a good comparison is exercise. We should all exercise, but if you're pursuing a form of exercise that you hate, it might be counter-productive in the long run (probably more prone to injury and more likely to take extended breaks).

[moonrambler]

Mike, typo in line four of your blog. Or maybe it's a Freudian slip