Today is normally Beating the S&P day with Ethan Haskel, but we are changing the schedule a bit this week. Ethan's column will run tomorrow, then he will be off for two weeks on a trip to Nova Scotia. I will be gone during that same period, but I'm going to Mexico.
August. Nova Scotia. Mexico.
Mexico. Nova Scotia. August.
It looks like one of us is headed in the wrong direction. I think it's me.
Since today is normally Ethan's day, I thought I would steal one of his ideas and write about how investing is like my video camera.
I've been planning to buy a digital video camera for many months now. The idea was to get one to record the children's adorable moments and have it in time for the trip to Mexico. I bought it today, two days before I leave. I will probably be taking it out of the box for the first time and reading the manual on the plane.
Yes, I've been dithering. I've haunted the electronics stores, surfed all over the Web looking for that elusive combination of price, service, and quality, and compiled long lists of features. Most of my dithering was about which camera would provide the best quality video and still pictures. In an earlier life I was a photojournalist, and I have an unfortunate tendency to get very into specs. I've decided that this is a handicap.
The closest thing to what I really wanted was too big, too expensive, or both. Finally, I found a stripped-down model that didn't have the best optical stabilization, didn't have the best recording mode, wasn't even close to the resolution I had hoped for, and actually cost less than I had planned to spend. I bought it for one reason: It fit my hand. It weighs next to nothing, and it will easily fit into a belt pack -- meaning it will always be there, comfortable and ready to shoot.
There are two investing lessons here. First, it really pays to dither a bit. During the dithering process, I learned a whole lot about digital cameras. If I had just gone for a camera that felt good to begin with, I would have bought this one in a heartbeat. Then, two weeks later, when I realized its limitations, I would have been very unhappy with my choice.
So, lesson number one is take your time. Set up a brokerage account and pop your cash into a money market account or index shares of some kind, and spend some time studying and thinking about various investments. Comparison shop and figure out what the risks and possible rewards are before committing to any kind of investment. You will make a better choice, and chances are you will be happier with your choice.
The second lesson is to pick an investment that is right for you. It needs to be right for who you really are, not who you think you are, or want to be. My photojournalist self used to own three Leicas and half a dozen lenses. I was rather cool when all decked out with cameras, film belt, and flash. That's not me any more. You may like to think of yourself as a hotshot investor, riding the Internet wave to wealth. Hey, if that's really you, go for it. (Just remember that waves have crests and troughs. Can you take the troughs?)
If you are interested in a mechanical system like the Foolish Four, are you aware of its limitations? Are you prepared for the times when it just doesn't work like you expected? Do you really understand that it is a long-term strategy and that means it won't beat the market every year? You will feel a lot better if you are aware of these things before you commit.
My new video camera is nothing like a Leica. It's really more like an Instamatic -- a product of Kodak (NYSE: EK), one of our Foolish Four Portfolio stocks. I never liked Instamatics, naturally, but millions of people have taken millions, if not billions, of photos with Instamatics... photos that mean a lot to them and that they probably never would have taken if they had to remember what f-stop you use on a slightly overcast day with ASA 100 film (f/11 at a 1/125 sec. shutter speed -- wow, I didn't think I would remember that).
I ended up buying my new camera from a website that I found while doing a "best-price" search. The last time I did that, I bought something from a company in Canada. This time, instead of having it shipped, I drove over to a hole-in-the-wall office and picked it up in person because, as it turns out, the e-commerce site that I liked best was located less than four miles from my house. What a small world we live in!
Fool on and prosper!
See Also
