In May of 2005, I figured that it was time to get serious about understanding the financial markets. Since graduating from college (1982)—yes, I’m starting to feel old--I've been working my potookus off in addition to being a mother and spouse, seemingly in my spare time. So there was little time or energy to devote to the market study. I figured a few well-placed mutual funds would do fine. Not so.
With an accounting/financial background, I figured (naively) that the process would be both quick and straightforward. Hah! Now, 15 months into this odyssey, I've moved from that dangerous stage of not knowing what you don't know to the queasy stage of knowing what I don't know. While still an uncomfortable stage, at least it's less dangerous! While I'll keep my confessions of stupidity to a minimum, I'll offer up that all of the aphorisms that you read about I've violated in some way or another. There's a reason for those aphorisms--so if you are starting out, heed them.
The very first thing that quickly became apparent at the onset is that there are some very smart people who are very giving of their time (and opinions) about all aspects of investing. That's a true act of generosity, so if you are visiting those places and have comments, understand that it's like your kids' little league coach...they're volunteering. Meaning...play nicely.
The very second thing is that all of these very smart people have very divergent opinions about what they think the market was doing and was going to do. I would recommend that everyone read Ed Young’s Seven Blind Mice. Yes, it is a children’s book—a delightful one at that. If you have children in your life procure it and enjoy reading it with them. In my view it describes very accurately the value and context of the mélange of market commentary that you hear and read everyday. For those not familiar with the story, it’s about seven blind mice that are crawling over an elephant and trying to figure out what the heck it is. One goes down a leg and thinks it's a Roman column. You get the picture.
Bottom line: We are all blind mice trying to figure out how some discrete knowlege/understanding in our possession fits into the mosaic that looks like an elephant. In reality, it will look like a tiger, a gazelle, or even a platypus before any of us realize it's an elephant--and we will have placed our bets accordingly. Moral of the story? In the market, if it looks like a gazelle, but it is really an elephant and you do not recognize it as such, you will be eaten by a lion. To lose the jungle metaphor....the market will beat you up and take your lunch money. Wahhhhhhhh!!!!!!
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