About 12 years ago, Amy and I began investing in the stock market. We are not big players, but we consciously made a decision to max out the 401(k) and take extra money to invest in stock and mutual funds. Today the market is where it was when we started. Three lessons learned.
1.) The market does not always go up. There is this talk that the market will always go up, as if America has a God given right to expanding markets. This flies in the face of free market capitalism and competition. There are no guarantees and there is always risk.
2.) Buy and Hold is a wrong strategy. There is a buying strategy and an exit strategy. When investing need to have both in mind. Mutual funds make it very hard to think that way, where individual stocks are easy to exit out of.
3.) When a sword drops don't try to catch it, run. We have Citigroup in our personal stock portfolio. We bought at the high and we bought half way down and now we have nothing. Losing a little is better than losing a lot.
These are hard truths that I always knew, but the banks and wall street sell these myths. Be smart with your money, because it is a tool for doing good in the world.
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