Learning From the Past

Back in the 1980’s my father, encouraged by friends and family, decided to get involved with the stock market. I’ll never forget my surprise when I discovered that he actually checked two books out of the library and started reading them. Dad never read books.

But these he did. Then he snagged a subscription to the local Herald Leader. He poured over the financial pages, weighed his options, opened a brokerage account, and invested in American Motors.

A few months after that he pulled out at a significant loss.

What can I learn from this? I’ve dug through my mind, searching for clues in hopes of learning from my dad’s mistake, and I’ve learned a lot as a result.

Two Books Do Not Knowledge Make

Dad based his knowledge on two books that he checked out from the library. I’m not even sure that he read both of them. Dad was certainly not a reader. If there is one thing I have learned in my life, it is to not base your knowledge (or your financial future) on just one or two books. The more you read, the more pieces to the puzzle you will find, and the more practical knowledge will stick in your brain.

I’ve easily gotten my dad beat on this score already. I’ve read a handful of books and I’ve got even more on the way to read and study. I’ve even working up a list of books on specific areas of the stock market to acquire and study as time and money allows.

I Have the Internet

Unlike my dad, I’ve got the Internet–and I know how to use it. I can use the Internet to do in-depth research on a company, and I have just enough bookkeeping knowledge thanks to my failed attempts at college to read the SEC filings and translate them to English. I might not be able to understand everything that I read, but I can understand enough to know whether a company is making money, has a history of turning a profit, if they have a long, stable history of issuing dividends even in financial down-turns (we’ve had several of them over the past couple of decades for reference), and whether insiders are buying or selling a particular stock.

I can also go online at any point to immediately see how my stocks are doing. I don’t have to call a broker or trust him to do what I need; all I have to do visit a website.

This is a huge advantage in itself.

I Have a Different Mindset

My family was struggling back in the 1980’s. Dad had his leg amputated early on in that decade so he had went from making big bucks by working two jobs and owning rental property to supporting us on Social Security Disability. During the stretch of time when he became involved in the stock market, he’d also lost the ability to bootleg for extra cash thanks to some legal problems he was involved in.

Because of his personal challenges, he was scared. He was darting around, trying to figure out ways to make a quick buck because he didn’t know how he was going to be able to support us otherwise. My parents may have been cheap but they weren’t necessarily frugal. As a result, they didn’t know how to live on extremely little.

I may be poor but I’m far from desperate. I know beyond a shadow of a doubt that I’ll be just fine working a minimum wage job. I could even get a higher-paying job if I wanted one.

Most importantly, I have no one to support but myself now. My kid is grown and paying her own way in the world. I know what it’s like to worry about how to support your family, how frightening it is trying to make your money stretch as far as you can. Unlike my father I have no one to support but myself.

Instead of looking at this as “I’ve got to make money in order to survive,” I’m looking at this as “if I can figure this out I’ll be able to feather my nest so I won’t have to work so hard in the future, and I won’t have to worry if something happens that prevents me from working later on in my life.”

I also know that if I lose money that I’ll be able to survive the loss. I’ll be able to make it back. I could get a better paying job, re-open my computer repair business, promote my books a bit harder…as long as I don’t go overboard and destroy my pillow, I know I’ll be just fine, regardless of what happens.

I Have the Advantage

In looking through the past I’ve learned that I have a distinct advantage over my father. I intend to take that advantage and run with it.

What’s the worst that can happen? I lose a bit of money, end up having to work through my retirement–I’ll have to do that anyway if I don’t try, so unlike my dad I’ve got nothing to lose. Even better, if I make this work I’ll be able to help others learn how to improve their lives as well.

Looking to the Future

Now that I’ve analyzed my past, it is time to look towards my future. Time to get back to work.

Have you ever analyzed your past in order to learn from yours (or others) mistakes? Please share your stories in the comments below.

3 thoughts on “Learning From the Past

  1. Karen

    Annie,

    Thank you for taking us on your journey! You are amazing. Can hardly wait to see what you come up with as you grow richer in every sense fo the word. Here’s a website that I really like: jlcollinsnh.com He has a great series on stocks and I also like the informtation he writes that he shared with his daughter because its simple and even I can understand what he is talking about.

    Of course when it comes to great ideas about how to make extra money, I’d suggest some great books by a wonderful author – Annie Jean Brewer!

    Has your silver arrived yet?

  2. Joshua Cogliati

    First of all, looking for other things to do with your money besides a savings account is worthwhile. And, as you mention, a scheme for making a quick buck is probably likely to end in failure.

    I guess my warning is that the stock market is already played by people who have a lot more money and as a full time job, so they have probably already grabbed any opportunities for making above average returns.

    So if you want to put some money in the stock market, it has a better expected return than playing the lottery, or buying a boat (unless you are going to make money with the boat, in which case the boat might do better), but don’t put a lot of work into the stock market. I expect that you have a much better chance of making more money on an hourly basis with getting a better paying job, re-opening your computer repair business, or promoting your books a bit harder or other non-stock market activities.

    I wish you good luck and skill in your learning.

    Here are some related links.

    “Risk is not about volatility, it is about loss of capital. ”
    https://www.economist.com/buttonwoods-notebook/2018/04/18/six-precepts-every-investor-should-remember

    “in long-run equilibrium, firms in a perfectly competitive industry will earn zero economic profit.”
    https://open.lib.umn.edu/principleseconomics/chapter/9-3-perfect-competition-in-the-long-run/

    “In the thickly traded parts of the stock market, where the collective power of human civilization is truly at its strongest, I doff my hat, I put aside my pride and kneel in true humility to accept the market’s beliefs as though they were my own, knowing that any impulse I feel to second-guess and every independent thought I have to argue otherwise is nothing but my own folly.”
    https://equilibriabook.com/inadequacy-and-modesty/

    “Survivorship bias”
    https://xkcd.com/1827/

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