FOOL ON THE HILL: An Investment Opinion
The importance of doing things BADLY is, in a way, the whole point of The Motley Fool. Feeling like you have permission to screw up is an important part of learning how to do anything. Most people spend their entire lives waiting to get good at something before they feel ready to go out and do it. In technical terms, this would be called "bass ackwards."
An adult faced with the same situation is afraid of expense and embarrassment. In part they're afraid they might break whatever they're playing with, but the big hassle isn't the expense: They're afraid of making a fool of themselves. This is something they feel they should already know how to do, and as a result, the process of actually learning it is embarrassing. When confronted with the failure of their first or second attempt, they give up rather than trying a third, fourth, or 15th time. And the fact that they couldn't do it -- because they gave up -- makes them feel stupid.
One of my favorite cartoonists is Illiad, who draws the comic strip "User Friendly." He didn't start as a cartoonist; he started as a Web designer who just happened to draw cartoons lampooning his co-workers at a Canadian Internet service provider. These days, the comic strip is his full-time job, and it's turning into a small business with employees and everything.
The really INTERESTING part about this is that when he started out -- and I mean this in the nicest possible way -- he really couldn't draw. Compare the first "User Friendly" comic strip in the archive with a more recent strip and you'll notice a distinct improvement in the artwork.
The same goes for Pete Abrams' "Sluggy Freelance," which has won several polls as the most popular comic strip on the Net. When he started, it looked considerably less developed than it does today. Both Pete and Illiad had a lot more talent at drawing than I do now back when they started their strips, but what really honed their talents to their current states was doing it every day for a few years.
Even the most brilliant have to start somewhere. Mozart wrote his first piano concerto when he was six, but that's not what he's remembered for. He's remembered for pieces such as "The Magic Flute," which he wrote decades later. Mozart was a certifiable genius, but intelligence is simply the rate at which an individual can learn. Mozart learned rapidly, but he still had to go through all the steps along the way to playing instruments and reading music. And it took him years to advance from his first compositions to the ones he's really famous for.
During college, Stephen King sold short stories. After college he became a teacher, and continued selling another short story every couple of months as a sideline. But in the entire year before his first novel (Carrie) was accepted by a publisher, he didn't manage to sell any of his writing. But he kept at it, and today he's the most successful author I can think of. All published authors will tell you the secret to writing is to write. Anybody expecting to write the great American novel must first write the mediocre American novel -- and the lousy American novel before that.
Warren Buffett started with a paper route, and Roger Lowenstein's book details many of Buffett's early investing mistakes. He learned not to sell too soon by selling too soon. Berkshire Hathaway (NYSE: BRK.A) itself was the company that taught him one of his favorite sayings -- the one about how turnarounds don't work.
The Motley Fool is basically a bunch of guys and gals in silly hats. If we can do this, anybody can do it. That's what we tell everybody who asks, and that's what I'm telling you right now. You CAN do this. Really. In a business where professionals lose to blind luck because they refuse to learn from even the most obvious mistakes, the individual investor who brings his or her brain along really does start with an advantage. As you learn from your mistakes, you gain a much bigger advantage.
Everybody has to start somewhere, and if you never start you never get anywhere. You don't have to start out brilliantly. Almost NOBODY starts out brilliantly, and those who do spend the rest of their lives trying to live up to it. The important thing is to start. Buy and hold. The "and hold" part turns out to be the one most people have trouble with -- especially those professionals -- but it's really not that hard.
Before investing comes saving. Stick $100 in a savings account. If you can't afford that, sock away five bucks. If you can afford more, go for $1,000. But practice leaving it there and NOT SPENDING IT. (This is the tricky bit.)
Then look into index funds. Look into dividend reinvestment plans. There are many ways of investing a small amount of capital with a small amount of knowledge. You don't have to retire after three months of spectacular success. On your first go, simply not losing your money puts you well ahead of the average. (This is why you start things off with a small amount while you learn what not to do.)
Get your feet wet. Learn. The Fool's School is here to cover the most obvious stuff, and the "Ask a Foolish Question" discussion board earns its name. Everybody starts ignorant. Not everybody stays there. But the only way to really learn is by doing. So go. Do.