A couple of weeks ago, before visiting 15 cities in 15 days as part of the kickoff for our PBS special, I wrote some words on trusting others. I received a few dozen e-mails -- generally a sign that I've written something that mattered -- and I thank you for them. If you didn't get a chance to read that short piece, "Millions Made Successful Trades on eBay Yesterday," here it is. To sum it up, much of life -- and even a few business models -- are based on this trust in others. It is a trust that, without realizing it, we often take for granted. But in a society that is so very good at reporting all the latest bad news, with all its accompanying minutiae, we're frequently in danger of forgetting both the truth and the import of this enduring trust.
That was about trust in others. Today, I want to write about trusting oneself. In a poor stock market and a poor economy, these words are intended not so much as a salve as a reminder, but perhaps they work both ways.
A book I would recommend to anyone -- to you, to everyone -- was first pointed out to me by Guy Kawasaki, and it's called If You Want to Write, by Brenda Ueland. Written by a wonderful 20th-century American writer who lived long enough and richly enough to win an international swim competition in her 80s and be knighted by the King of Sweden, Brenda Ueland has written a book which verily breathes The Motley Fool credo, "You can do this." If you want to, Ueland tells us. In place of her word "Write" in the title, you can fill in any word you like, because hers is a punchy, pungent book about doing.
For instance, I found myself substituting the word "invest" in place of "write" at frequent points in her book, and coming away with wonderful lessons. Take this short passage from page seven (my substitutions bolded):
"So often I come upon articles written by critics of the very highest brow, and by other prominent investors, deploring the attempts of ordinary people to invest. The critics rap us savagely on the head with their thimbles, for our nerve. No one but a virtuoso should be allowed to do it. The prominent journalists sell funny articles about all the utterly crazy, fatuous, amateurish people who THINK they can invest."
Yes, Brenda. And yet the truth is, there is no "stock market school" in this country, no formal training, no official way to get a "stock market diploma." So the biggest difference between those who invest and those who do not is... guess what? Just that the former have actually decided to try it, and gone on to learn from their successes and their failures. We are all forever students of the game. Remember that I have zero formal "stock-market training." Nada. Zippo. I went to good liberal arts schools and got passing grades, but virtually all that I have learned about stocks has been taught me by my parents, challenged and often confirmed by my own reading, and won most of all by the doing of it. Listening, reading, doing -- I can't think of three better ways to learn anything! And they're all available to you and me.
Hey, you can't live in our society today and not be an experienced consumer. And out of that experience, each of us emerges as a potential investor with unique insights. I know enough about computers, the Internet, literature, sports and games, and the business of business to feel very comfortable making investing decisions in those categories. My assistant Melissa, on the other hand, knows theater, restaurants and food and cooking, literature, yoga, and France. You have your own short list of stuff you know, about which you are a confident commentator.
Your investments should express those things! I should be able to pick up your brokerage statement and feel as if I know you. Your portfolio -- however your money is invested -- should read like a personal statement... as personal a statement as your credit-card bill every month (though I hope that neither statement is overly long!).
On the other hand, we should stay out of what we don't know, because that is where we cannot trust ourselves. On UNC-TV in North Carolina a few nights ago I was asked by one caller whether I would invest in oil and gas right now. I responded quite emphatically NO. Does that reflect on oil and gas? Nay, dear reader. That answer merely reflects me, because I have no business investing in oil and gas stocks; my own life experience with this industry largely comes down just to a mechanical unscrewing and rescrewing of my car's gas cap every couple of weeks. I have no greater interest in the industry than that. Investing should be personal.
I talked to a 29-year-old woman recently who was now despairing of her decision to finally get started investing this past year. "It was July," she said, almost with a tear -- we all know what's happened since July. But too many of us exhibit an unfortunate tendency to overfocus on the recent past, to the exclusion of historical context and to the even more crippling exclusion of that which really counts: what lies ahead. Here is a woman who will likely be investing for 50 years or more in the future, presently in danger of being scared off of investing because the first few times she went out on the ice rink she slipped and fell on her derriere.
Then again, when I asked where she slipped up she mentioned that her counselor had put her in several things including an annuity (which she didn't understand -- and which I really doubt was a good investment for her), and also that she'd probably lost all of one $3,000 investment in private shares of a pre-IPO company. Was she a "confident commentator" on either of these? I do not think she herself would say so. Nothing like it. Are you a confident commentator on each of your various assets? Can you sell me on your annuity as well as you might sell me on your house? If not, you should be able to. Wake up.
We must trust ourselves in good markets and in bad. In good markets it's easy, ain't it? In bad markets, we're suddenly much more likely to question how much we really know, and more willing to bemoan -- more than usual -- our mistakes. But these instances of losing money -- which is inevitable for every long-term investor, and will happen to you and me many times in the future -- are really just excellent learning opportunities in disguise, aren't they? This learning should then cause us to proceed forward more confidently then before, exhibiting and embodying more trust in ourselves. You get to know yourself better than ever in the down times. Use that.
Finally, as Brenda Ueland finally says somewhere near the end of her book (I paraphrase), if you want to write then... doggone it... write! And if you want to invest, if that's why you've joined us in Fooldom today, then doggone it begin today by making your first investment -- or, a better investment! Make what you have learned in your life benefit your financial future and your lucky heirs. And stay Foolish.
David Gardner, March 22, 2001