Financial wisdom and a return to basics

Posted: November 21, 2007 in Banking, Blogging, blogroll, F4Y Picks, Finance For Youth, Financial Institutions, Investing, Life

Every once in a while, I talk with friends who are REGISTERED REPRESENTATIVES, and they make me chuckle when they forget to leave “sales mode”. I will ask them questions about the MARKET or about real estate, and they will tell me that this is a great time in America’s history when it comes to finance. I personally think that there is some merit to what they are saying, but not much.

Then I talk to a friend who has been in the business for more years than I have been alive. When I ask his opinion, he’s a little more frank, and I think he’s right on the mark. This brings me to a point that I think is very important. It has been said that those who don’t learn history are doomed to repeat it (teachers will tell you that if you don’t pass History, you are doomed to repeat it). I have never said that it is a good idea to listen to older people and believe what they say outright. I wouldn’t do that to you. But you absolutely should listen to what they have to say and, after careful consideration, make your own decision that you are comfortable living with.

And what was my older friend’s advice?

The days of wild abandon with money are over.

We are going into a recession, if not a full blown depression.

Save money when you can, as much as you can.

The days of living large on credit are also pretty much over.

Don’t think of buying anything without having a large down payment and a really good credit profile.

When it comes to investing, the basics apply as well:

Don’t look at investing as a way to get rich quick. It might work once or twice, but the house always wins.

If you want to invest in stock, take a strong look at the company itself. Companies that are well-managed, have concern for their customers, and a genuine desire to do good will always outperform companies who are hot flashers (his words, not mine). The old saw about investing in the companies you would like to do business with has been right for years. Once you buy a stock, hold it until the fundamentals of the company have changed—other than that, hold on and reap the profits as they come.

As I said, I think he’s right on. First, he has made a lot of money for a lot of people with his investment advice. Second, he’s seen everything in the finance world as it has happened for several decades. Third, I don’t remember a time when he has been wrong. Based on this, it looks like its back to basics time. The good news is this is what I’ve been talking to you about for the past year. The bad news is that there are going to be a few people (possibly even people in your family) who aren’t ready to accept this new reality. They will make fun of your strategies and they will always have a “better” way to do things quicker. Using the training you have received about QUALITIES OF SUCCESS, you should be able to overcome their objections.

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