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As a follow-up to my previous, let me elaborate a bit further.

A couple of weeks ago, I was in CO for visiting and fishing. My daughter had flown west from Ohio, and I had driven east from OR, and we were going to converge later in the day at my son-in-law’s in Crested Butte. I had met her flight into Gunnison pretty much on schedule, and the plan now was to check out the creek the three of us would be fishing in a couple of days, once my son arrived. We spent the afternoon doing that and then had the choice of retracing our route and ending up in Crested Butte or to take a dirt-road cutoff that seemed to link the two roads. I had pulled way over on the shoulder, so as not to block other cars that might be taking the fork. The first car that passed us stopped and asked if we needed help. The second car that passed us stopped and asked if we needed help. Mind you, we were merely out in the country, not on a seldom-travel road with the hood of our car up asking for help. We had just stopped to look at a map. But people saw the possible need for help, and they didn’t hesitate to volunteer.

I think that experience describes well the “American character”: kind, forgiving, and generous, even to a fault, in the ordinary matters of life. But get those same people talking about markets, investing, economics, or politics, and as it’s as if they’re from a different planet. They don’t even understand the words they use. They just repeat the usual “conventional wisdoms”, but they never bother to test their assumptions, and they never learn from their mistakes. Instead, they blame everyone but their own lack of effort and engagement for their poor returns or market losses, and they resent the success of those whom they consider to be their social peers (or inferiors). Yes, they will idolize lucky fools like Buffet, but they won’t select for themselves appropriate role models, and they won’t learn their craft the way it has to be learned, one investment at a time, week after week, year after year, good markets and bad.

As a simple example, consider the phrase, “Investing is a business.” How much of their assets under management, how much of their research time, does the average investor spend on R&D, deliberately losing small money, deliberating exploring ideas that might not work out, so as to gain the experience and judgment that might help them make bigger money? Nearly everyone invests, because they are forced to do so from the way this country has restructured pension plans. But how many of them will describe themselves as an "investment professional”, someone who manages his own account and can actually make his living from it, even if the income is only supplemental income to other, more secure resources? Once you’ve made that crossover from casual participant to professional, you also realize you can go the other direction as well. You can play for fun.

My point is that you won’t make any worse money by investing for fun than you will from investing for whatever noble purpose you want to attach to the socially-approved form of gambling that you are doing and if you do lose the attitude of entitlement that most bring bring to the task of investing and, instead, treat it like the silly, capricious, luck-dominated game it really is, then you begin to create for yourself the opportunity to separate luck from skill and to develop latter, so that you can own both your mistakes and what you do right.

Charlie
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