Message Font: Serif | Sans-Serif
 
No. of Recommendations: 16
danieltsang,

Good morning, Fool! It's great to hear your positive comments about our site. We do work hard to supply quality content and it's always great to hear that people have benefited from it.

As much as I'm pleased to see your post and am reluctant to annoy a supporter, I feel strongly compelled to address a few points in your post. Hope this doesn't come across as a superior attitude, or a personal attack. It is neither.

This reply is not really even directed at you, specifically. Some points you made just caught my eye and struck me as a good opportunity to get on my soapbox. I just want to advocate a critical inerpretation of our perspective - see repoonsatad :) - which I think is the norm for the overwhelming majority of our readers.

In fact, I think that this post will appear condescending and offend most of its readers, so I'll apologize in advance. On the off chance, though, that it might appeal to the small group that doesn't yet get the full message, it's worth the risk, and the bandwidth.

I have read most of the articles and features about the importance of following the principles of a Fool (live it, learn it, breath it).

I admit that I do "breathe" some core Foolish principles like consumer advocacy, community support for the elimination of credit card debt, fair access to market information, investor-friendly commission structures, etc. Speaking for myself only, though, when it comes to our investing advice, I'd recommend learning it and even living it, if it makes sense to you, but I'd stop short of breathing it.

Don't get me wrong. I honestly feel that we provide an important, high-quality, under-represented perspective on investing that you just can't get anywhere else. Moreover, our focus on education and the empowerment of the individual to make up her own mind is the core of our mission, not the performance of our investing strategies (in my opinion). These are the main reasons that I'm proud to work here.

That said, we're human and certainly not prophets, and, certainly, past performance is not a good indicator for future returns. It scares me a lot that a few people appear to swallow our perspective too completely.

All investors that buy individual stocks should "breathe" in a variety of strategies and examine them critically relative to their personal time line and risk tolerance. Once they do, I'm confident that our strategies are of sufficient quality to "land" a lot of folks for the long-term. But un-critical devotion to any strategy -- based on past returns, quality content or shared faith in the individual investor -- is not a good idea. It's your money. You da man/woman.

Oh sure, the market may have gone down 100 points on a particular day a few months back, but it would always rebound and bounce right back up the next day by 150 points; hence, securing my belief in "don't worry about the short-term, because the long-term will reward you." With such consistent next-day rebounds like the above example, I became more and more confident in the teachings of the Fool.

Then, something happened a couple weeks back. The market dropped (alot)... and it didn't rebound by an even higher increase. No, it didn't even rebound at all. The next day it dropped... and the next day, it dropped again. "What was going on," I wondered. "Could the bear have finally woken up from its slumber?"

I questioned it some more and I discovered what the cause of this decrease was -- it wasn't because of the interest rates hikes, it wasn't because of the bad earning reports, it wasn't because of the Microsoft case. You know what it was? The Wise.


We had a little "roundtable" discussion, here at Fool HQ yesterday, where we talked about the whole "bubble" notion. One topic that is of particular interest to us, given our mission, is "is the average investor well-equipped to separate hype from reality?"

In other words, there are two industries (media, brokerages) that profit greatly from market volatility and it's to their advantage, frankly, to whip a little "bubble" on us now and then, to keep the fear alive. Investors should be on the guard against this nonsense.

On the other hand, bubbles and bear markets are not a complete fiction wholly created by Wall Street or the media. Boom and bust cycles have characterized all of economic history and this is unlikely to change, at least qualitatively, regardless of how powerful the "new economy" may be.

Given that we so strongly caution investors against getting caught up in the volatility hype -- which can damage their returns -- I think it's important that we are just as strong on the reality of true bear markets and their impact.

Historically, some bear markets have produced 10 years or more of little to no movement in stock prices. Personally, I do believe that those with long-term horizons (my personal time line and risk tolerance leads me to think in terms of 15-20 years) can safely ignore these macro-economic realities. In fact, they will generally do best if they stay invested in strong companies through several cycles of boom and bust.

That said, there is a big difference between short, dramatic drops -- like the '87 crash and recent events -- and a bear market. If a few months of volatility is testing the faith of some Fools, I fear that we're not succeeding in our mission. So far, this is really nothin'.

A true bear market will last a lot longer than a month or two or even a year and it won't be the product of any Wall Street consipiracy. If your investing timeline or risk tolerance won't allow you to stay fully invested throughout, you may want to consider that investing in individual stocks is not be for you.

Again, sorry for the preachy tone and please just ingore it if you resent it. Just had to get it off my chest.

Regards,
Paul



Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.