PRN: Reflect on Some Odd Observations

Physician's Money Digest, September30 2003, Volume 10, Issue 18

I have a penchant for the pithy aphorism,the financial factoid, and theodd observation that, taken by itself,either can't or shouldn't be expandedto a whole column. But these thingsaccumulate in my file until I hear amuted rumbling that warns me we areapproaching critical mass. Then it's timeto act in the hope that 1 or more ofthese little darlings will resonate withsomeone out there and illuminate theirday. To abuse poor Shakespeare yetagain, let's have at and unleash thedogs of…whatever.

  • Debt and political misstatementshave at least 1 thing in common, the FirstLaw of Holes: If you're in 1, stop digging.
  • Opportunity is always micro—achance, often hidden to others, to exploita niche. Some say a real opportunityis not a real risk.
  • The financial media makes its livingby explaining complexities and subtleties.So do you. But investing success for mostpeople is based on keeping things simple.
  • Today is the first day of the rest ofyour saving, spending, and investing life.
  • Stock and bond trading rules thatbecome well known lose any advantagethey might once have had.
  • 65% of all the people over age 50who ever lived are alive today.
  • The IRS only gives you a choice of2 of 3 recipients to whom you can leaveyour money: your loved ones, charitiesand nonprofits, and the IRS. If youdon't choose, they will.
  • A long, 5-year car lease only makesfinancial sense if it's a luxury car and youplan to buy it at the end of the lease.
  • 90% of an investment program'sreturn is a result of your asset allocationpolicy.
  • Victory isn't guaranteed, so watchthe store and the till.
  • Marrying for money can be themost expensive thing you ever do.
  • With yields so small, investing expensesloom so large.
  • Keep records, records, records,even if you discard them later.
  • Progress is made only when progressis measured. Likewise, a job ofwork without a deadline is not work.
  • The less liquid your investmentsare, the more they're going to wanderfrom their true value.
  • The number of active investmentmanagers who outperform the indexesin the long term is less than chancewould predict, not more.
  • Using sell criteria is the mostimportant difference between the innocentand the knowledgeable investor.Remember, your investment's potentialupside gain is infinite, but itsdownside loss limit is painfully visible.

In conclusion, as President Reaganused to say whenever he had nothingelse to say, "Well, there you go."

Jeff Brown, MD, CPE, a partneron the Stanford Graduate Schoolof Business Alumni ConsultingTeam, teaches in the StanfordSchool of Medicine Family PracticeProgram. He welcomes questionsor comments at jeffebrownmd@aol.com.