Safety first investing
Posted on January 5, 2009 by Richard Beddard
Filed Under Investing, Markets |
On failed resolutions, and safety-first investing
I’m not keen on kamikaze New Year’s resolutions, where you solemnly give up chocolate, alcohol, or making a fool of yourself at karaoke, only to succumb a few days later and regret being so naïve as to believe that simply willing something would make it happen.
Maybe if you’re in Apollo 13 and the alternative is a grilling on the outer reaches of the atmosphere, failure really is not an option. Most of the time failure is part of life and if you let a moment of weakness, a single chocolate bar, end your diet, well*1, then, you’re not going to lose very much weight.
So I’ve made about sixteen New Year’s ambitions so far. Most of them have little to do with investment or blogging and I’m not going to talk about them here. Two do, though.
First, I’m going to blog every day. As I’ve tried this before and come up short, I want to make it very clear that it’s an ambition, and not a resolution. So, if I don’t blog one day, I haven’t failed. It’s just a hiccough.
My posts will change. I can’t research and write a cogent article for this blog as well as write for Money Observer, Moneywise and iBall, edit, and endure the insane banter of the iBall crowd I sit with.
The word ‘blog’ is a contraction of “Web” and “log” and the first blogs were online diaries. There are all sorts now, but my ambition is to turn this blog into a traditional web log, a diary of an investor and financial writer. I’m going to devote the last 45 minutes of the working day to each post and that’s all, so posts will be less formal, there will be spelling mistakes, and there may even be a certain amount of speculation.
Speculation brings me on to Tom and Pete, two friends I caught up with over the New Year who are more interested in what their old mate is writing, than investment itself, I think, and bound by a common desire to appear on these pages. Anyway, well done gents it worked.
They questioned my attempt to distinguish investing from speculation, so I thought I’d have another go. How about this:
Speculating is guessing about the future. It’s betting that product X will take off and company Y is going to go up in price because everybody likes product X. It’s basing your decision on what you don’t know, what you can’t know because it’s in the future.
Investing is making judgments about the present. It’s buying shares in companies making good profits, with valuable assets and honest managers at good prices. It’s basing your decision on what you know, because you can read it in a company’s annual reports.
That’s why I want to mention another ambition. Basing your decisions on what you don’t know seems to me to be a risky thing to do and buying shares in what you know, much safer. So my motto for this year, and maybe every year from now on is ‘safety first’.
Happy New Year.
Footnotes:
- A good analogy for my view on stop-loss orders, but that’s another story.
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4 Responses to “Safety first investing”
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[...] I know, I said I’d blog every day, but tomorrow I’ve got the day off J Tags: BRW, BVIC, DWHT, ERM, FRM Category: [...]
Nice Post….keep it up !!!! Good job
John Lochrie
Thanks John
Interesting website, i have bookmarked your site for future referrence