Message #426
Wednesday, September 5, 2001
"Better one safe way than a hundred on which you cannot reckon."
Aesop (The Fox and the Cat, 6th century B.C.)
SUMMARY OF TODAY'S MESSAGE:
Dr. Steve Sjuggerud's advice to the members of the Oxford Club (a successful membership club for investors) is remarkably in synch with what we've been saying for some time. To consistently outperform the markets, he recommends (1) that you know your edge and don't stray from it, (2) that you have an exit strategy, and (3) that you stick with an exit strategy that is consistent with your beliefs.
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THREE POWERFUL INVESTING SECRETS FROM A VERY SUCCESSFUL INVESTMENT CLUB
Whenever my friends ask about investment advice, I recommend they join the Oxford Club. It's a membership group that has been helping individual investors for more than 20 years.
In a recent club communication, one of its investment advisors, Dr. Steve Sjuggerud, made the following three-part recommendation for "consistently outperforming the markets":
1. Know your edge and don't stray from it. To do better than average, you need to have an edge -- some knowledge that gives you a truer, faster, or more "inside" perspective on what you are buying and selling. This knowledge can come from your own experience in business -- by investing in companies like your own -- or from the experience of following the advice of someone you can trust who has his own edge. Make sure that the edge is one that is based on real-life experience -- not theory. And don't wander off into new territory. Stick with what you know.
2. Have an exit strategy. Before you buy the stock, know at what price or under what circumstances you are going to sell it. For Oxford Club investors, Steve recommends selling his stock recommendations (1) when something fundamental changes within the company or (2) when the stock closes 25% below its closing high. (That's called "a trailing stop-loss.")
Going into an investment with an exit strategy affirms these important truths: You can't predict the future, and your knowledge is imperfect. If the market moves against you, you fold. Only a foolish egotist would hold on to a stock after the market has proved that his belief in it was unfounded.
3. Stick with an investment strategy that is consistent with your beliefs. "The most common investment strategy I see from individual investors," Steve says, "is cherry picking. They buy one stock they saw on CNBC, one because a neighbor said to buy, one that a newsletter guru recommended, etc. Cherry picking doesn't work. What's more, most individual investors cherry pick retroactively -- after the trend. Their picks are not only mixed-up but also dated."
If you read my recent series of messages on investing, you know I have essentially the same views as these. I've known Steve for some time and can vouch for his intelligence, his integrity, and his commitment to making Oxford Club members richer. Keep these thoughts in mind when you invest and you'll have a distinct advantage.
(For information about the Oxford Club, go to http://www.agora-inc.com/reports/OXFU/ETR_Report.)
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Modesty is good. But modesty that borders on self-effacement is a mistake -- and a big mistake in a busy, corporate environment.
If you are not good, get good. When you get good, let your customers/bosses/clients know it.
Take a moment today and think about your/your company's attributes. Do you work harder than others to satisfy? Do you provide extra/better services? What values/benefits do you provide that others don't?
Have you ever lost a customer because you failed to follow up? Or because you moved or he moved? Or because something changed?
Do you stop selling after the contract is signed?
Selling -- what you did when you acquired the customer in the first place -- was the experience the customer paid for. Yes, he paid for the product/service promised. But he paid for being sold too. There is a lot more to life than the material objects we use. Those nontangible things (dreams, hopes, desires, beliefs) are present in any good selling experience. Make sure they are present in the relationship always.
Start selling. Keep selling. That's what you are getting paid for.
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My friends who drink vodka swear they can taste the difference between different brands. Most of them are probably bluffing. Worse, they're spending big bucks on brand names -- the ultimate "Living Rich" quality-of-life violation.
According to a 1998 survey by the Beverage Tasting Institute of Chicago, the best-tasting vodkas were Grey Goose (France), Canadian Iceberg (Canada), Stolichnaya Gold (Russia), Staraya Moskva Premium (Russia), Van Hoo (Belgiuman), Stolichnaya (Russia), Tanqueray Sterling (England), and Rain Harvest (USA).
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LIVING RICH: FAKE IT TILL YOU MAKE IT
Many art critics will tell you that Rembrandt van Rijn was one of the greatest artists of all times. According to Thomas Hoving, former director of the Metropolitan Museum of Art, his etchings rival the engravings of Albrecht Durer and his drawings compare favorably with those of Leonardo da Vinci.
What you don't often hear, but may enjoy telling others, is that Rembrandt was a completely disreputable sort. He stole his first wife's dowry, cheated on his taxes, seldom paid his bills, and spent his money so frivolously that he died a pauper. These sins, of course, put him in the company of many of the world's great artists -- just where he belongs.
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A miasma (my-AZ-muh) is, literally, a vapor that comes up from the marshes and seems to poison the air. The word is used metaphorically today to indicate a situation that is unwholesome and befogging.
MMF
Copyright Early to Rise, 2001
* When it comes to growing your business, stick to your knitting
* Tough crowd? Begin with something they can agree with
* Business Idea: Sell to moochers
* George Carlin on laissez faire
* Word to the Wise: Bildungsroman