Here comes Halloween

In less than 10 days, Halloween will be upon us again.  It's one of my favorite holidays.  I love it so much because, for anyone who knows me, I LOVE CANDY.  I can't get enough of it.  I've lived on sugar since I was a little kid, when my uncle owned a penny candy store.  I would visit it with my family and we would raid the store and fill up bags and bags of candy.  My aunt wouldn't charge us anything, even though my uncle was never happy about it.  Today, I still eat close to a pound of candy per day.  (Yes, I've paid for it in dental bills many times over!)

I also love Halloween because I love creating costumes and entering contests.  I got into it because I had a friend long ago, Bruce Polin, who was the most talented kid on the planet.  At 13 years old, he was a make-up artist and he would create all sorts of creatures which were on par, or better than, most of the movie studio make-up artists.  He inspired me to start creating my own costumes.  Some were my own ideas and some were taken from other costumes I had seen, but I would try to recreate them in my own look and feel.  I have been an "upside-down man", a "giant pillow" (along with a bunch of other pillow friends bouncing into each other at Studio 54 - yes, I'm dating myself again), a "martian", a "Victoria's Secret" model, a "half-man/half woman" (vertical split), a "Centaur", a giant (really, really giant) "spider", "Regan" from the Exorcist, the "Corpse Bride", a "punk rocker", "Michael Jackson", and more.  My favorite of all time, however, is the "Headless Man."  I received more compliments and turned more heads (pun intended) than any other costume ever.  I have re-created this costume with various cut-off heads a few times.  I've won more contests with this costume than any other.

Here is one version of it (a Frankenstein version) which you can click on to enlarge:

Admittedly, this was not my favorite version.  I had one which was much scarier and creepier, but I can't seem to locate a picture of it.  Regardless, this will give you an idea of how much time and effort I put into creating my costumes, because I simply love the holiday.

When my kids were younger, they would ask me every year (for a few weeks before the start of the holiday) "What costume are you going to wear daddy?".  They would get so excited about it, but I would avoid telling them until I completed it.  They were always shocked.  My wife, fortunately, would often help me with some of the sewing and assembly.  It was a big effort each year, but well worth the fun.

I started a Halloween contest at the company where I worked for over 20 years, when the company had just started out.  At the time, there were six people, and only three of us wore costumes.  Twenty years later, there were over 200 people wearing costumes at the company, and it became the most-anticipated party of the year.  Now, so many more people I know get into the Halloween spirit and it helps bring out the kid in all of us.

This year, just go for it.  Create a costume, or if you don't have the time, go out and buy one, and go trick-or-treating with your kids...or if you live near NYC, go to the parade in the village to see some absolutely insane costumes.  Either way, bring out the kid in you, have fun, be safe and enjoy.

Be an investor, not a gambler

I’m long overdue for a new post. 

This information is directed at folks of all ages, but most certainly Millenials (Gen Y) and Gen X, who can benefit most from it.  (Your greatest asset is “time” when it comes to successful investing.  And the sooner you realize this and take advantage of it, the better.   If you save now, and invest wisely, you’ll reap significant rewards down the line.)

I’ve been investing for thirty years, since I graduated from college.  Well, actually, I’ve been investing for twenty years.  It turns out I was gambling the first ten years, I just didn’t know it at the time. 

What happened?   Sometime around 1995, I read a book called The Warren Buffett Way.   It took only a few hours for me to realize I had been a complete idiot for the prior ten years.  Nobody had ever taught me how to invest.  I never took a course on investing.  I simply read all of the personal finance magazines and thought I was smart enough to invest.   And, wow, was I wrong.

Prior to reading the book, I had dabbled in purchasing stocks like so many other people have done for years (and many people unfortunately still do.)  With what little money I was saving at the time, I purchased stocks based on articles I read in magazines, or from listening to a “hot stock tip” from a friend, or even from something I had heard on television.  You know why they call them “hot” stock tips?  It’s because if you buy the stock based on a “hot” tip, you’re likely to get burned.

Sure, sometimes stock tips work out fine, but oftentimes it’s because you get very lucky due to timing, and only infrequently is it due to a great company that appears out of nowhere and becomes a huge success.  Regardless, if you buy socks on a whim, it’s no different than gambling.  For every one high flier, there are dozens, if not hundreds, of complete duds.

The point is, you should always be willing to invest significant time in doing serious research and due diligence to ensure the investment you’re considering is a legitimate one, with solid (and improving) cash flow and earnings, respected brands, competitive barriers to entry and so much more.  There are many, many more things to look for than what I am listing here.  I am only pointing out that it takes hard work to find a company which has good long term potential growth in its stock price, while having low risk.

I used to think that simply buying a company with a reputable CEO at the helm was a smart move, but I learned the hard way that it’s impossible to truly know someone.  Consider how Bernie Madoff fooled so many people (fortunately, I didn’t invest with him.)   Even if you do find a truly smart and talented CEO, you have no idea of knowing if he/she is going to stick around.  And it’s also possible that a good CEO may simply be running an inferior business with little potential.   Warren Buffett once said “Invest in a company that an idiot can run, because one day one will”.   I love that quote.

If you’re not willing to invest the time to research a company in order to understand the basis for the value in that stock and the risk associated with it, then “don’t buy it.”   Another option is to find a financial advisor who has a solid track record, who you trust, and who you have the confidence he/she is doing the extensive research mentioned above.  Your ultimate goal is to buy stock in a great business at a fair price…not a fair business at a great price.

How do you determine if the price of a stock is fair?  You first need to read as much as possible about investing.  This blog post is not meant to provide you with these tools.  It takes time to learn about investing, and it also requires real discipline.  My goal is to only provide you with my past experience, so you can hopefully learn from it and not make the same mistakes I did.  If someone had provided me all of this information ten years earlier, I’d be in much better shape financially.  Regardless, with 20/20 hindsight, I can now tell you to “invest the time before you invest a dime.”

Fast forward to today.  More people than ever before have abandoned the stock market completely.  This is very unfortunate.   Over the long run, great companies with even greater brands will generally do well.  I say “generally” because there are, obviously, no guarantees when it comes to investing.  However, if you take investing seriously, like you should, then chances are good you’ll do fine over time.  Think about this; most people work 40 hours, or much more, every week to make an honest living, and then they only spend minutes making investment decisions with those same dollars they worked so hard to generate…and they risk losing those dollars so very easily.   It’s crazy, but it happens all of the time...and it doesn't have to be that way.

I have a few suggestions if you’re thinking of investing in equities.  First and foremost, read a few books about Warren Buffett’s investing philosophy before you buy another stock.  Learn from him.  Second, read The Intelligent Investor, by Ben Graham.  Third, don’t follow the herd.  (Buffett says “be greedy when others are fearful and fearful when others are greedy.”)   Think for yourself.   And last, don’t get emotionally attached to a stock.

Buffett’s investing acumen simply cannot be matched, in my opinion.  His record is bulletproof.   Yes, he has a few pieces of shrapnel still remaining in his bulletproof vest, but he has done well because he does his best to avoid the landmines.  The most memorable thing I remember him saying is that he has done well not because he has hit many grand slams, but rather, because he has avoided many catastrophes. 

You’ll learn a great deal about investing if you read his annual letters to his shareholders.  If you read them all, over a few days, you’ll be amazed at what you can learn.

You can see them here.

If I can save one person from experiencing the losses I experienced years ago, then this post will have accomplished its goal.

Happy investing.