So... This is awkward.
As I'm sure you heard the Nasdaq rallied just under 1% yesterday, closing a triumphant 8pts over 5000. I'd sort of been expecting this to happen in a couple of days, not now. My plan was for the Nasdaq to hit 5000 just as I wrapped my last segment tomorrow. I wanted to point to the scoreboard as we hit 5,000, drop my mic and commence roaming the earth getting into adventures like Cain in Kung Fu.
Alas, the animal spirits got ahead of themselves. That leaves us with two days to discuss everything else I've learned about finance in the 20 plus years since I left college. Today we'll do the basics to wealth managing and broad stock picking. Tomorrow we'll talk stock picks and disclose what I'm lugging with me as I head into the breach. Think of it as a 5 minute commencement speech cut into 2 parts.
Here are the four things I'd tell year 2000 Jeff Macke about building wealth (besides "buy Apple (AAPL) on margin and never, ever sell"):
1. Stop buying houses. The idea of home ownership as vague American dream dates back to the immigrants who founded this nation. For people coming from countries where only the elite could own property, having your own home was synonymous with freedom. We instinctively genuflect before the idea, but after owning 5 homes in 18 years I can tell you first hand there is nothing less free than buying a house. If you worked backward from a scheme by which the government replaced feudal lords and made homeowners serfs we'd end up with pretty close to the system we have now. To buy a home is to sink a ton of money in a totally illiquid sinkhole. For every 1,500 feet you effectively hire a part time employee to take care of your stuff. When you leave, if you can find a buyer, you end up paying 5% in brokering fees. A house is an investment under one condition: you find the place of your dreams when you're 25 and never move. Otherwise suck it up and rent.
2. Write everything down. Your memory is awful. That works against you particularly when you invest but it applies to just about everything and everyone. Like it or not, we're all Brian Williams. The only difference is most of us aren't asked to tell the same story over and over for 15 years then called to the carpet for changing the details. Simple solution. Write everything down, especially trades. Nothing elaborate. Just entry price, date and why you bought. If you're so inclined, write a stop loss point. Your price target is "Infinity".
3. Sell 95% of your stuff. You don't need it. It's not worth it. Pick one passion and master it. Half of the stuff sold to the super rich is built to inspire a tiny moment of Christmas morning in the heart of jaded billionaires. If it worked, they wouldn't still be making bigger and bigger private jets. Spend on experiences. Toys are for little kids.
4. Finally, keep moving. Never retire. Keep learning. A mind starts to rot after about 5 years in the same job and almost immediately upon retirement. You can't live forever but your mind should outlive your body by at least an instant or two.
I learned all that stuff the hard way. You don't have to. Stay tuned tomorrow for stock picks and targets!