Thanksgiving Day is almost here. It's nearly time for family, food, football -- and, of course, being thankful. With the holiday spirit in mind, we asked three of our specialists which investments they are thankful for. Here's what they had to say.
Patrick Morris: One investment I am thankful for is an investment that I didn't make personally, but one my parents made for me. In high school my I was given Moneyball and while I never would've known it at the time, it helped shape much of how I think about the world of investing and finance in general.
At the time I wanted nothing more than to become a general manager of a professional sports team. I figured I'd be some cross between John Schuerholz who built my beloved Atlanta Braves dynasty in the 1990's and Billy Beane of the Oakland A's who was the main character in Moneyball. Although that dream has since faded, the central lessons learned from Beane remain.
In Moneyball I learned how having an understanding of value was critical to most decisions we'll make. In short, Beane operates with a philosophy that seeks to determine what an individual player is worth to a team in terms of wins and losses, and assigns a value accordingly.
If player A contributed 80% of the value that player B did, but could be signed at 50% of the cost, then it was a no-brainer decision. While it may not wow sports commentators or get fans excited, it is absolutely the right choice to make.
But the thing is, that mind-set isn't only true in sports, but investing as well, because understanding value is essential. We must seek to understand the long-term prospects of a business, see if we can assign a value to them, and make a decision from there.
This could mean finding a good company that is undervalued by every measure and looks downright cheap. But it could also mean finding a company that appears "expensive," but its incredible profitability and prospects for growth warrant the premium price and more.
Or again using the baseball analogy, if player A contributed 150% of the value that player B did, but could be signed at 120% of the cost, then it too is a no-brainer decision.
While I may never be in the front office of a team that goes to the World Series, the lessons learned form Billy Beane still apply in what I do today, and for that I am thankful.
Cheryl Swanson: Twenty-five years ago I was only really good at one thing -- procrastinating. So when a self-styled investment "consultant" hit me up with the idea of buying high-yielding bond certificates from the biggest home builder in Phoenix, Charles Keating, I was a sitting duck.
When Keating's Lincoln Savings and Loan failed in 1989, it left about 23,000 customers with worthless bonds. I'd backed out of that deal last minute, but the other ideas my consultant came up with weren't much better.
Looking back, letting this con artist talk me into worthless investments was completely my own fault. It was only after a lot of the money was gone that I realized I had to take charge of my situation. That's why -- despite losing money I had worked hard for -- I'm profoundly thankful it happened.
Like everything else in life, taking control of your investing is all about starting. All by itself, starting is usually sufficient to build enough momentum to keep the ball rolling.
It's easy to be thankful for the good things. But every Thanksgiving, I remind myself to be thankful for the bad stuff that happens as well and the lessons that come as a result.
Keith Speights: My first job out of college was with a large consulting firm. One of the benefits with this job was a 401(k) plan. Many of my colleagues who were also recent graduates chose not to participate, thinking that saving for retirement was something that could be done later. I came close to making the same decision.
Fortunately, my manager asked me if I had signed up for participation in the company's 401(k) plan. When I responded that I had not, he let me have it. I still remember him telling me that I would always regret it if I didn't begin investing for retirement when I was young. His words made an impact. I began putting away a portion of each paycheck into a 401(k) plan.
Years have gone by, but that's still probably the most important investment I ever made. Actually, there were two investments involved. First was my investment into a retirement program – an investment that is still paying off today. Probably the more important investment, though, was that of a manager who cared enough about an employee's financial future to steer him in the right direction. For that investment, I'll always be thankful.
