Photo Source: Ronsart's Flickr
This decade has not been what most people would call ‘good’. The recession, housing market bubble ‘pop’, stock market dropping like an anvil … and the list goes on. Though from any adversity there is always a lesson to learn and grow from. In this case there are 10 lessons to be learned.
We know investors has left the US stock market, about $36 Billion worth of leaving, and things are bleak, though that is exactly why we need to examine what happened and why. There is a reason they teach us history in school; so that we can learn from our past mistakes.
The most amusing part of this whole ‘panic’ situation is what most things people are panicking about, or at least started to panic from, are false assumptions and horrid advice from so called “experts”. So what have we learned so far from our mistakes?
As Money Central @ MSN.com says:
- Diversification isn’t dead (nor bad)
- Asset allocation works
- Market timing doesn’t work
- Rebalancing reduces risk
- Save so you don’t have to sell
- Heed markets, not marketing
- Recognize trends and cycles
- Expect the unexpected
- Keep your own counsel
- There is no free lunch
It’s best said,
The events of the past decade, he said, are “an important wake-up call in terms of increasing financial IQ in this country.”
Added Bogle: “Never think you know more than the market; nobody does. It’s a matter of investing for the long term. Do your best, and don’t peek.”
These are time tested tips that aren’t just applicable to the stock market. Many of these have applications in our daily lives, such as rebalancing. Why need to look over our lives and see what needs fixing and how we can reshape our schedule to make the best of what we have. We also usually do this without much thought! There are plenty of times when you change your life for someone (a spouse maybe) or for something (school?), so this and the other tips aren’t new in any way.
What is important though is that you remember them. Use them to improve your life.The full article on Money Central explains all the points in detail and in easy to understand points.
To help you with your New Years/Decades Resolutions SmartMoney.com has compiled a list of the top 10 recommend reading material on improving your financial IQ:
- Fired to Hired By Tory Johnson
- Get a Financial Life: Personal Finance in Your Twenties and Thirties By Beth Kobliner
- A Gift to My Children: A Father’s Lessons for Life and Investing By Jim Rogers
- In Cheap We Trust: The Story of a Misunderstood American Virtue By Lauren Weber
- Investor’s Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between By William J. Bernstein
- Lords of Finance: The Bankers Who Broke the World By Liaquat Ahamed
- The Little Book of Main Street Money By Jonathan Clements
- The Myth of the Rational Market: A History of Risk, Reward and Delusion on Wall Street By Justin Fox
- Sellout: How Three Decades of Wall Street Greed and Government Mismanagement Destroyed the Global Financial System By Charles Gasparino By Charles Gasparino
- Too Big to Fail : The Inside Story of How Wall Street and Washington Fought to Save the Financial System — and Themselves By Andrew Ross Sorkin
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