Learning From Colbert

Five investing rules to live by is the title of an article on MarketWatch last week.  The five are derived from The Colbert Report.  You can see it here.

The Colbert Report leaves us 5 important investing rules to live by

According to MarketWatch, Colbert tells us:

  1. Don’t make it complicated if you want to succeed.  Colbert had a 434-part, tongue in cheek series called “Better Know A District” which aimed at reviewing all congressional districts.  Fail!  There are many more stocks, funds, sectors, countries and tactics than that for investments.  Keep it simple.  You cannot know enough to be a generalist.
  2. Don’t be so sure of yourself.  Colbert’s “truthiness.”  The gut truth.  The one that you can easily “prove true” by ignoring, or worse, not looking for  information.  Confirmation bias.
  3. Don’t overdo the patriotism.  Home country bias can hurt you.  It is easiest to know things abut it, but that just creates another kind of confirmation bias.  At the same time, don’t expect that other countries have the same standards for sharing information.  They do not.  Watch for size differences.  Google is worth more than the entire Russian stock exchange.
  4. Don’t be a one trick pony.  Colbert’s strength is his diversity.  His show was not formula talk segments.  The market has more options than you might expect.  It will make a better show if you have many points of view represented.
  5. Don’t wish upon a star.  Colbert is leaving and his fans will miss him. So too with a favoured security.  In the ’60s and early ’70s, IBM was a “one decision stock,”  just buy it.  It has been the poorest performing stock in the Dow for two consecutive years and the new IBM is not yet in sight.  Things change, you must do so too.

There are more than five factors to govern investing, but these make a fine checklist for someone already doing it.  For the rest, there are other rules.  Like, “Your future self wants your present self to save some money.”  Like, “Things do not always work out, own insurance.” and in all cases, “Have a plan and keep it up to date.”

I found the article to be clever and insightful.  It is worth a look.

Don Shaughnessy is a retired partner in an international public accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. Contact: don@moneyfyi.com  

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