Investing Isn't Rocket Science

By Lisa Shier

Ready to start investing, but not sure where to begin? Been investing for a while, but finding it hard to sort through mountains of information? Need encouragement to stick with your investing plan? Investing Isn’t Rocket Science can help you get started, decide what’s relevant to your situation, and resist the sort of temptations that lead to poor investing results.
The author really is a rocket scientist and knows that successful investing doesn’t require the kind of skill, smarts, or effort that rocket science does. The good news is that there are easy ways to invest that require remarkably little effort and skill. Applied conscientiously over time and with a little luck, methods like index fund investing and dollar cost averaging will produce results that are often better than more complicated investing schemes. The tough part is often sticking with the plan, avoiding panic, and filtering out the noise in the financial media.
Investing Isn’t Rocket Science is a based around a set of short and sometimes humorous sayings that the author has developed to keep her investing plans on track. These are the things she tells herself when she feels distracted, discouraged, or tempted to do something stupid. You can use these sayings to get started with an investment plan, to fine tune an existing plan, or just keep yourself on track.

• Language: English
• Publisher: Lisa Shier
• Release date: Mar 26, 2015
• ISBN: 9781310064807

Book preview

Investing Isn’t Rocket Science

By Lisa Shier

Copyright 2015 Lisa Shier

Smashwords Edition

Smashwords Edition, License Notes

This ebook is licensed for your personal enjoyment only. This ebook may not be re-sold or given away to other people. If you would like to share this book with another person please purchase an additional copy for each recipient. If you’re reading this book and did not purchase it, or it was not purchased for your use only, then please return to your favorite ebook retailer and purchase your own copy. Thank you for respecting the hard work of this author.

Disclaimer

The author really is a rocket scientist. She is not a financial planner, lawyer, accountant, or psychologist. Nothing in this is professional advice. Use any information contained in this book at your own risk. On the other hand, you also get all the credit for the positive results.

Table of Contents

Introduction

Investing Isn't Rocket Science

If You Can Buy Groceries, You Can Invest

Don't Put All Your Eggs in One Basket

Be the Tortoise, not the Hare

Past Returns Are No Guarantee of Future Results

Never Turn Down Free Money

Don't Pay for Someone Else's Armani Suit

Don't Just Do Something, Sit There!

Never, Ever Invest in Something You Don't Understand

Boring is Good

Be Stingy with Your Uncle Sam

Spock Would Be an Awesome Investor

Sleep on It

This Works: Dollar Cost Averaging

Pick a Plan and Stick With It

Cost is Easier to Predict than Performance

Scrooge McDuck is a Fictional Character

Plan to Grow as an Investor

Remember the KISS Principle

Ignore the Financial Media

Learn from Your Mistakes

Don't Panic

Suggested Reading

About the Author

Introduction

I’ve been an investor for over a quarter century. I’ve had some successes and I’ve made a lot of mistakes. Over time, I’ve learned that a very simple, easy, boring approach to investing has resulted in less mistakes and better performance.

Over time, I have come to believe that short term trends in stock prices are mathematically chaotic. Leaving aside higher math, it’s helpful to think of the stock market as a lot like the weather. There are definite long term trends, like warmer weather in June than in October, but the day-to-day variation is quite unpredictable. Care to guess the high temperature for your location a year from today? Do you think a professional weather forecaster would have any better guess?

It might seem that unpredictable stock prices are a bad thing, but that’s not necessarily true. They are unpredictable not just to the average retail investor, but also to every professional broker, financial planner, and money manager. The US has enacted a bunch of laws that further level the playing field between amateur and professional investors. It’s actually illegal to use information not publicly known to buy stocks just before prices increase. People like Martha Stewart have gone to jail for this.

Once you buy into the theory that stock prices have a large element of randomness, you can avoid popular strategies that have no value and concentrate on things that you can control. Many of these things, like taking a hard look at investing costs, are really easy. Being a self-disciplined investor is not necessarily easy, but it’s not expensive or technical.

Staying the course is less easy than it sounds. There are many distractions along the way. I’ve developed a set of aphorisms, or short sayings, that help guide my investing decisions. Reviewing them is really helpful when I’m tempted to do something stupid. In this short book, I share each of these sayings along with an explanation of why each of them has a golden kernel of truth.

Investing Isn’t Rocket Science

We all know that rocket science is very hard, that it requires great skill, training, experience and effort. Only the best and brightest can hope to succeed.

Investing isn’t like that. I’ve been both and investor and a rocket scientist and I know.

Investing at the retail level in America, buying mutual funds and perhaps stocks and bonds, does not require any great degree of skill, training, experience, or effort. Plenty of people out there would love to convince you that it does and that you should pay them to manage your investments, guide you through the wilderness, produce reams of purportedly useful information, or provide any number of other services. You are better