Ben Stein How Not to Ruin Your Life

I was a hit and miss investor before, with some successes (Berkshire Hathaway, Los Angeles Athletic Club ) and some huge flops ( General American Investors, among many others). But I was almost always in a state of frenzy. Fear and self-loathing about the stock market and my investments took all of the pleasure and much of the profit out of my investing. Many a night and day, I sat looking at my statements and beating myself to a pulp over my mistakes.

Since I joined the program, this has slowly changed. Now, investing still involves many mistakes and some considerable fear and uncertainty. But it's trivial compared with what I used to suffer 20 years ago. Mostly, I quietly, methodically, and slowly make money.

I respectfully believe that many of the principles I learned in my program are of value to investors generally, and so, I hereby offer some tidbits from my own personal outfit, Investors Anonymous.

I Am Powerless Over the Stock Market, and If I Believe I Do Have Power, My Life Is Unmanageable.

The stock market is an immense entity made up of trillions of dollars and billions of people. I float on the market like a cork on the ocean. I don't control it, I merely navigate it as best I can to get to my port without drowning.

Nothing That Happens in the Stock Market Is Personal.

How a stock performs after I buy it has little to do with me. Immense forces work constantly on its price. I can, at best occasionally, get on the right side of those moves and then, over long periods, make some money. If the market is crashing or rising, no one on Wall Street is doing it to me.

Feelings Come and Go -- They Are Not Facts.

From time to time, I can feel as if I am about to become fabulously rich -- or that I am about to go broke -- but these emotions will go away. This is just how life is in the market.

You Win Just by Staying in the Game.

We have a saying in the program: Time takes time. That is, to go a certain while sober or abstinent about food takes as long as it takes. It cannot be done overnight. Just so, unless you are trading on inside information or having a lucky streak, you will need a long time to get rich in the market.

But if you stay in the market, getting average or slightly-better-than-average returns year after year and avoiding horrendous losses, you will eventually make some major bucks. You can't hurry the stock market. The market just flows, like the mighty Mississippi. Flow with it, and you will reach the ocean of comfort sooner or later.

Stay Away from "Slippery" Places.

When alcoholics have a "slip" by taking a drink, or food addicts have a "slip" by eating two quarts of Häagen-Dazs ice cream, that's probably because they went to a bar or bought at the dessert freezer at Safeway. It's best for addicts to stay away from places where slips can occur -- that is, "slippery" places.

Just so, when investors lose big, it's usually because they are in markets subject to extreme volatility: Commodities, short sales, penny stocks, or high-tech stocks no one has ever heard of. If the investor stays in safe places like big broad index funds and large managed funds invested across a broad spectrum of the market, there can and will be occasional losses. But the catastrophic losses that change a life come from investing in slippery places.

Life Lived by Fear Goes Nowhere.

We have another saying in the program: The spelling of fear is "False Events Appearing Real". Similarly, in the investing world, there are always reasons to be afraid: Oil shocks, inflation, China, corporate fraud.

But these should not keep the people from investing at all. A few blips -- even large blips -- of misconduct or in macro conditions can be frightening. But the long-term picture for stocks has always been good -- if you take a long-enough perspective. If you let fear keep you out of the market, you are hurting mostly yourself.

Do Not Compare Your Insides With Other People's Outsides.

In other words, do not be driven insane by people telling you how much money they've made and how their picks always work out. It is never true. If Warren Buffett, the greatest investor of all time, can make mistakes -- and he sure can -- so will everyone.

Just invest slowly and methodically in broad indexes, variable annuities, and sensible ETFs, and don't be driven to rash actions by the siren song of other people's gains. The songs are probably made up anyway. Until you see the actual balance sheet, don't believe a word, and even if you do see the balance sheet, stick to your prudent, day-by-day investing, and you'll stay safe.

The main point is that a serene heart makes for a successful investor, and that taking it easy means raking it in.