Barry Ritholtz posted Byron Wien’s 20 Rules… It is a great read and an insightful list. Byron’s number 20 was very funny;
Never retire. If you work forever, you can live forever. I know there is an abundance of biological evidence against this theory, but I’m going with it anyway.
While I am no Byron Wien or even his dumb brother Myron Wien (that is a joke, I don’t believe he has a brother named Myron) there has been interest in my comments on this stuff over the years.
1) If you have investable assets then investing is a very important part of your life but it is far from the most important part of your life. Your family and your health are at least two things that are more important than your money and you may have more.
2) Every so often the capital markets will go down a lot and scare the hell out of a lot of people as if it’s never happened before. Knowing/remembering this ahead of the next one should make them easier to endure. In 2008 people thought the financial world was literally ending. Anyone not lucky enough to have reduced exposure early on but gutsy enough to not to have panic sold should now be back to even. No growth for five years is not a great result but it is not ruinous for someone who is able live within their means.
3) And while we are at it, live within your means. Better yet live below your means. A $4000 lifestyle is much easier to replace in the face of some sort of personal shock than a $10,000 lifestyle. As a related point, maybe number 3A, maintain a high savings rate. This creates more flexibility in the face of a personal shock.
4) Your investment strategy will not always work the way you hope. No single strategy can possibly be the best for all markets; that includes yours and mine. Similar to number 2; forewarned on this point is forearmed.
5) What your investment strategy should do is provide a combined reasonable chance for allowing you to have enough when you need it while allowing you to sleep most of the time (or all of the time if possible).
6) Your should exercise vigorously, regularly and most of it shouldn’t be enjoyable. We hike every Sunday and I love it. Twice a week I do a cross fit/traditional weightlifting routine and two other times a week I do the stair master and the best part about both is finishing.
7) When a particular segment of the market has a panic or a crash or some other nightmare your holdings in that particular segment are going to participate in that panic or crash or some other nightmare. Everything that has gotten hit hard in the last few weeks has been hit hard before and will get hit hard again at some point in the future. That they will get hit again in the future means they are not going to zero now.
8) Get a dog and then get a dog for your dog. The benefits are immeasurable.
9) Don’t forget what large declines feel like. For years I have contended that people somehow forget what it feels like to endure a large market decline, they react like it has never happened before which results in panicked action. This is really a self-awareness issue.
10) Don’t drink soda. You don’t have to be a diet nazi to eat fish once or twice a week, eat fruit everyday. eat a salad everyday and avoid soda.
11) You don’t need 20% in gold, other commodities, REITs, MLPs, absolute return, private equity or any other specialized segment of the market. All of the above can be valid parts of the market to include in a diversified portfolio but too often people end up finding out they had way too much exposure at the wrong time.
12) Volunteer somewhere. Volunteerism obviously plays a big role in my life and my wife’s life, me with our fire department and my wife with United Animal Friends. The personal rewards are enormous even after the Granite Mountain Hot Shots tragedy. We had a medical call at about 5:30 am yesterday and although the patient was scared there were also visible signs of relief on their face when we got there. In addition to doing good things it can help you with problem solving in other parts of your life.
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13) This time is not different. The details causing something to happen in markets might be different but the emotions of fear and greed are still driving prices just like they always have.
14) Don’t wish away the week to get to the weekend, you end up wishing away your entire life that way. If you dislike your job so much that you do wish away they week then you need to find something else to do. This is not a call to go in on Monday and scream “I quit” but instead start working on a plan to make a change even if it takes months or years. You will eventually get to where you want to be and even just the process of getting there can relieve whatever negative feelings you take from the job you are trying to change.
15) True bear markets start slowly over a period of months, they do not start with crashes. Both the tech wreck and the Great Recession started this way.
16) Life is about the journey not the destination. This is similar to number 14 but different enough to be its own point. This is also one about self awareness.
17) You have more control over your spending and saving than you do returns in the market. If over the next ten years global equities compound at just 2%, you will not compound at 10%.
I could only come up with 17 for now, hey Byron has 30 years on me. What would you add to this list?