Thursday, September 18, 2008

The Successful Investor

Last night I ate at a barbecue joint. I'm fond of this place. They don't have plates and you sit at metal folding chairs around long tables that both remind me of the parish hall of the church I attended as a kid. It's a family place where families eat. I held the door open for the woman behind me. Wouldn't have seemed right if I hadn't. That kind of place.

I typically eat with an exceedingly literate and well-informed companion -- The Wall Street Journal. The paper's news was exceedingly grim. I pushed it aside and sat back to think about the day. Friends had called and emailed to ask what I thought, what they should do. Some I told to do nothing. Some I told to start buying. The right thing to do in this market is what you feel most comfortable doing.

Come to think of it, that's the right thing to do in every market.

We're hearing a lot about the business of risk these days. It's been around for centuries, but now it's on page one. We hear the people on the news try to say "credit default swaps" and "delevering" as though they've been saying them for years. They haven't been, of course, and they're clearly not comfortable with the terms.

But you don't have to understand these terms to be a successful investor.

You do have to understand what the term successful investor means.

It doesn't have anything at all to do with beating the Street, earning X return or timing the market. It's wholly unconnected from your account balance. Being a successful investor means you can sleep at night. It means you've put your money into securities that you understand and have confidence in -- and that's the sort of advice I try to give. And when the financial waters roil and the Journal prints articles vaguely suggesting an imminent financial apocalypse, what do you do?

Well, I went to eat barbecue and watched a little baseball on TV.

Treasury Secretary Hank Paulson and Fed Chair Ben Bernanke, among others, aren't getting a lot of sleep or time off these days. Nor are their counterparts in Japan, England and the rest of the Group of Eight. That's as it should be. Together, those men and nations have the tools to stave off a meltdown -- not a crisis, but a meltdown -- and the smart move is to sit still and give winds and tides time to change.

That's my take, and this: A weekend off is going to do a lot of good.

In the meantime, I'm doubling down on CIT.

No comments: