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The Most Important Investment You Can Make Right Now
I was taken aback by the question: "What is the single most important investment I can make right now?"
Not by the question itself - I get that one a lot.
But because of who was asking it and what they excluded.
It was put to me by Jason, Susan and Hao - all of whom are juniors at Skidmore College where I was lecturing last week.
They wanted to know what they - as college students - could do to ensure their financial future.
Not only that, but they specifically asked me to exclude specific investment choices that a more seasoned, older investor would consider.
I thought about it for a few minutes, then responded: "It's discipline."
Investors are faced with a unique challenge, I explained. Many are not at the mercy of the markets as they believe, but are actually subjected to the whims of the person they see in the mirror every morning.
That's why consistent investment results are often more dependent on behavior than actual performance.
Put another way, investors who "behave" themselves by being disciplined tend to do far better than those who don't.
Beating the Markets Takes Discipline
For example, DALBAR, a Boston-based research firm ,released a 2011 report that showed investors had achieved a mere 41.9% of the S&P 500's performance over the twenty years ended December 31, 2010.
In other words, investors managed to leave a staggering 58.1% on the table.
According to the report, the average investor achieved a mere 3.8% a year versus the 9.1% annualized return of the S&P 500 because they tended to jump in and out of the markets at the worst possible moment depending on their emotions.
This reinforces something I talk about all the time in my presentations around the world - investors lose billions by trying to time their decisions based on nothing more than greed, fear or simple paralysis.
In my opinion, it's why the single biggest investment anyone can make is "discipline."
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Insider Trading Ban: Congress Really Wants You to Like Them
In an attempt to end plunging approval ratings - and win favor in an election year - the Senate passed an insider trading ban yesterday (Thursday) preventing Congress members from profiting from non-public information.
The Senate passed the bill in a 96-3 vote. U.S. Rep. Eric Cantor, R-VA, said the House would consider the bill next week. U.S. President Barack Obama pledged to sign it immediately.
Congress members hope the new law will change growing American disgust with Congressional perks and partisanship, which has hammered approval ratings down to the teens.
"The numbers of people who have a favorable impression of this body are so low that we're down to close relatives and paid staff. And I'm not so sure about the paid staff," Sen. Joe Lieberman, I-CT, said earlier this week.
Insider Trading Ban Run Down
The insider trading ban prevents members of Congress, top aides, and administrative officials from using non-public information when trading. Any stock bought or sold must be disclosed in a public report online within 30 days.
Several last-minute amendments added to the insider trading ban include:
The Senate passed the bill in a 96-3 vote. U.S. Rep. Eric Cantor, R-VA, said the House would consider the bill next week. U.S. President Barack Obama pledged to sign it immediately.
Congress members hope the new law will change growing American disgust with Congressional perks and partisanship, which has hammered approval ratings down to the teens.
"The numbers of people who have a favorable impression of this body are so low that we're down to close relatives and paid staff. And I'm not so sure about the paid staff," Sen. Joe Lieberman, I-CT, said earlier this week.
Insider Trading Ban Run Down
The insider trading ban prevents members of Congress, top aides, and administrative officials from using non-public information when trading. Any stock bought or sold must be disclosed in a public report online within 30 days.
Several last-minute amendments added to the insider trading ban include:
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