Bill Fleckenstein – Prepare for The Big Stock Market Crash (2018-2019)
Bill Fleckenstein: President of Fleckenstein Capital – Bill is a professional money manager with over 30 years of experience, he also writes a daily Market Rap column for his web site at Fleckenstein Capital. Bill has appeared at one time or another in virtually all financial media including King World News, Bloomberg, CNBC, The New York Times, MSN, Marketwatch, Barron’s and more. He is often quoted in both national and international media. Bill is a highly sought after speaker, successful author of “Greenspan’s Bubbles” and he has written daily commentary on market action since 1996 and FleckensteinCapital, which launched in 2003.
Your biggest investment mistake will be the failure to prepare for failure
Michael Batnick’s book ‘Big Mistakes’ highlights what you can learn from investing greats including Benjamin Graham, Warren Buffett, Stanley Druckenmiller and others
The best investors are just like you and me.
They get greedy. At times they’re overconfident. They fear missing out.
We all deal with the same emotional challenges when our hard-earned money is at stake. That’s why I wanted to write a book that puts those experiences into context. Mistakes are going to happen. They’re an unavoidable part of investing.
The stock market is fertile ground for mistakes, so you must have a plan of action for dealing with lousy investments.
There is no right way to invest. What one investor views as a mistake, another might view as discipline. Whatever unique challenges you encounter along the way, the important thing is that you take them in stride and don’t carry them with you. Dwelling on experiences can make dealing with the inherently uncertain future even more difficult than it already is.
Most of the lousy investments I highlighted in the book weren’t caused by a failure to accurately discount future cash flows. It wasn’t miscalculations in the spreadsheets. It was, rather, a failure to prepare for failure. The stock market is fertile ground for mistakes, so you must have a plan of action for dealing with lousy investments.
The important thing about investing mistakes is that you need to avoid making the catastrophic ones. Being aware of the risks with whatever strategy you choose is paramount.
So, for example:
• If you’re speculating, limit your losses and keep the initial investments small.
• If you’re buying index funds, be prepared for periodic declines of 20% or more.
• If you’re picking actively managed mutual funds, be prepared for three consecutive years of underperformance.
• If you’re picking stocks, know that most fail to beat their index.
All those things should be decided before you pull the trigger, not when you’re already feeling the pressure.
In “Big Mistakes: The Best Investors and Their Worst Investments,” I share stories of investing hardships from some of the best to ever wager on securities.
Did you know the following?
• Benjamin Graham, the father of value investing, lost 70% of his assets during the Crash of 1929/Great Depression.
• Warren Buffett, CEO of Berkshire Hathaway BRK.B, +0.03% paid for a company, which is no longer in business, with stock that is now worth $7 billion!
• Chris Sacca, a venture capitalist, passed on the opportunity to invest in Dropbox DBX, -0.32% Airbnb and Snap SNAP, +2.42%
• Stanley Druckenmiller, a former hedge fund manager who oversaw money for George Soros, bought technology stocks just as they were approaching their apex.
If Druckenmiller was infected with the fear of missing out, we should be very careful with how we think about our own abilities. I’ve made more than my own share of mistakes, which I conclude the book with.
There are so many potential investing mistakes, you can never avoid them all. In fact, successful investing is about learning from mistakes and not having to learn the same lesson twice.
I’ve learned from the investing greats that discipline and humility are just as important as intelligence and vision.