by sschullo » Sun Sep 07, 2008 8:24 pm
Hi,
I am also just trying this out.
This table contains the basic financial concepts we discuss frequently on this site (scroll way down). I wanted to experiment using the compare/contrast strategy for better understanding and comprehension (I am a retired teacher). I labeled them as the old 20th century way of investing versus the new 21st century thinking.
Many of the 21st century concepts and ideas originated in the 20th century, however, these ideas have survived, developed and replaced some of the old, discredited ideas because they don't work on the behalf of 21 century informed and self taught investor.
Thanks to Taylor's investment gems and my readings, I have simply borrowed the ideas from the authors listed on this forum and a few are from my experiences.
One last thing, I have used HTML code to create this table but the lines do not show even though the table looks perfect on my browser. The other annoying result is that the display is the blank space between my message here and the table down below. I am told there is no work around.
Thanks,
Steve
[Note from Admin Alex. I figured out a workaround. You have to take all the line breaks out of the HTML code. It makes for messy code, but it displays OK. I've done this with the following table]
<table> <tr> <th BGCOLOR="#99CCFF"> 20th Century Thinking About Investing, Finances and Money</th> <th BGCOLOR="#99CCFF"> 21st Century Thinking About Investing, Finances and Money</th> </tr> <tr> <td>1. Being sold a product</td> <td>1. Purchasing an investment</td> </tr> <tr> <td>2. Active Strategy</td> <td>2. Passive Strategy</td> </tr> <tr> <td>3. Individual stocks</td> <td>3. Low cost mutual funds</td> </tr> <tr> <td>4. Managed funds</td> <td>4. Index funds</td> </tr> <tr> <td>5. Adviser/Investment guru/Famous manager's responsibility</td> <td>5. Individual responsibility</td> </tr> <tr> <td>6. Complicated, exclusive, sophisticated plan</td> <td>6. Simple Plan</td> </tr> <tr> <td>7. One way communication from adviser to client</td> <td>7. Two way communication between adviser and client</td> </tr> <tr> <td>8. Inefficient Market</td> <td>8. Efficient Market Hypothesis/Modern Portfolio Theory</td> </tr> <tr> <td>9. Biased information from an insurance agent/broker/adviser</td> <td>9. Objective information and discussion from "self help" non professional Internet forums</td> </tr> <tr> <td>10. Invest strictly in US domestic equities</td> <td>10. World Wide investing in economies</td> </tr> <tr> <td>11. Invest in hot sectors</td> <td>11. Invest in different asset classes</td> </tr> <tr> <td>12. Predicting and timing the market</td> <td>12. Sticking with a plan</td> </tr> <tr> <td>13. Highly aggressive exciting actively managed portfolio</td> <td>13. Diversified "boring" passive portfolio</td> </tr> <tr> <td>14. Owning a few company stocks</td> <td>14. Asset allocation, diversifying and rebalancing when needed</td> </tr> <tr> <td>15. Investing experience is fun, active, dynamic (bull market), "I am confident in my abilities!"</td> <td>15. Investing is routine, ordinary and balanced with overall life activities</td> </tr> <tr> <td>16. Investing experience is consuming and terrible (bear market), "I was ripped off by the system!"</td> <td>16. Investing is routine, ordinary and balanced with overall life activities</td> </tr> <tr> <td>17. Vulnerable by depending on a professional 100%</td> <td>17. Protected by self education</td> </tr> <tr> <td>18. Rarely/never looking at your investments OR tracking every stock or portfolio several times a day</td> <td>18. Have a plan and rebalance when needed</td> </tr> <tr> <td>19. Investing in 100% equities</td> <td>19. Including bonds, REITS, ETFs</td> </tr> <tr> <td>20. Selecting investments primarily based on the hype of past performance and future prediction</td> <td>20. Past and future performance are unimportant and categorically ignored</td> </tr> <tr> <td>21. Strive for that perfect portfolio that beats the benchmarks</td> <td>21. Strive for a diversified low cost portfolio</td> </tr> <tr> <td>22. Employee bargaining units endorsing specific and expensive vendors and financial planners</td> <td>22. Bargain units offering objective financial information to members</td> </tr> <tr> <td>23. Investing in individual stocks, sectors or managed funds</td> <td>23. Investing in indexes that track the broad economies</td> </tr> <tr> <td>24. Professional led and biased</td> <td>24. Non professional, self help led and objective</td> </tr> <tr> <td>25. Naive investor</td> <td>25. Informed and common sense investor</td> </tr> <tr> <td>26. Misled</td> <td>26. Candor with full transparency</td> </tr> <tr> <td>27. Relies on Wall Street mania and talking head business news</td> <td>27. Relies on self education and common sense</td> </tr> <tr> <td>28. Takes Wall Street noise as great tips</td> <td>28. Ignores Wall Street NOISE totally</td> </tr> <tr> <td>29. Thinks short term</td> <td>29. Thinks long term</td> </tr> <tr> <td>30. Hoping to beat the benchmarks/constantly searching for THE gimmick</td> <td>30. Opting for benchmark returns with an intrinsically boring portfolio</td> </tr> <tr> <td>31. Omission of important information almost always related to costs</td> <td>31. Transparency of information including revenue sharing costs, 12b(1) fees, loads, commissions, etc.</td> </tr> <tr> <td>32. Believe that the financial future is predictable</td> <td>32. Financial future is totally unpredictable</td> </tr> <tr> <td>33. Have a terrible time admitting not knowing</td> <td>33. Can honestly and courageously assess when we do not know</td> </tr> <tr> <td>34. Can never admit that you are your worst enemy</td> <td>34. Can honestly and courageously handle the truth about yourself</td> </tr> <tr> <td>35. Getting rich</td> <td>35. Building wealth</td> </tr> <tr> <td>36. Save every penny (miser) OR borrow and spend recklessly</td> <td>36. Living a meaningful and full, but frugal life</td> </tr> <tr> <td>37. Investment fees are immaterial</td> <td>37. Investment fees matter significantly</td> </tr> <tr> <td>38. Embracing, believing and living the consumer culture</td> <td>38. Ignoring consumerism and opting for the goal of being financially independent</td> </tr> <tr> <td>39. Expense ratios are for marketing, serving and managing and worth every penny</td> <td>39. Expense ratios are the best predictors of performance (2002 study by F.R. Corp</td> </tr> <tr> <td>40. Investments and speculations are synonymous</td> <td>40. Investments and speculations are antonyms</td> </tr> <tr> <td>41. Trader</td> <td>41. Buy and hold</td> </tr> <tr> <td>42. Mixing investments with insurance products</td> <td>42. Keep investments and insurance needs separate</td> </tr> <tr> <td>43. Stock market information has preordained and predictable patterns</td> <td>43. Stock market information is completely and totally random</td> </tr> <tr> <td>44. Market is inefficient with predictable anomalies which are easily exposed for your benefit</td> <td>44. Market is efficient and smarter than the wisest professionals on Wall Street</td> </tr> <tr> <td>45. Professional management's number 1 priority is to sell</td> <td>45. Fee only advisers must put the interests of clients first or are in violation of their fiduciary responsibilities</td> </tr> <tr> <td>46. Hire a commissioned based adviser/broker</td> <td>46. Hire a fee only adviser and pay "out of pocket" as with all other professionals</td> </tr> <tr> <td>47. Mutual fund companies are owned by management</td> <td>47. Vanguard is owned by share holders</td> </tr> <tr> <td>48. Beat the market averages is the priority</td> <td>48. Reducing risk and costs are the priority</td> </tr> <tr> <td>49. Endless portfolio quantitative analyses: Beta, Alpha, R-Squared, Monte Carlo, Sharp Ratio</td> <td>49. No mathematical analysis know today can accurately predict future returns over long periods of time</td> </tr> <tr> <td>50. Denying, avoiding and forever negatively reacting to mistakes</td> <td>50. Learn from all mistakes, adjust portfolio accordingly and move on</td> </tr> <tr> <td>51. Don't make mistakes</td> <td>51. Doing something new almost always involves some mistakes: learn from them</td> </tr> <tr> <td>52. Sales pitch from people in dark silk suits as gospel truisms</td> <td>52. Knowing the crucial difference between sales pitches and objective information</td> </tr> <tr> <td>53. Using reams of past performance calculations, fund managers bios and star ratings to decide</td> <td>53. Forge ahead NEVER knowing future returns: That's a fact, now deal with it</td> </tr> <tr> <td>54. Source of financial information is bias towards the professional's self interests</td> <td>54. Source of financial information is objective towards the individual investor's self interest</td> </tr> <tr> <td>55. Never settle for market averages: averages is always a bad thing</td> <td>55. Average market returns are an absolutely valid goal: Averages are a great thing</td> </tr> <tr> <td>56. Never challenge authority</td> <td>56. Always ask questions about fees, services, philosophy, passive vs. active management</td> </tr> <tr> <td>57. Impulse buying or selling securities</td> <td>57. Creating a plan and sticking with it</td> </tr> <tr> <td>58. The financial management profession is the most lucrative profession in the world (KPMG consultant quote)</td> <td>58. Unfortunately, the financial management profession is STILL the most lucrative profession in the world</td> </tr> </table>
Last edited by
sschullo on Sun Sep 07, 2008 8:27 pm, edited 1 time in total.