A Lone Wolf Does Not Call Home

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Once a wolf pup reaches maturity around the age of two years, in some instances the leader of the pack, the alpha wolf, will see it as a threat to its leadership and drive it away.  After that,  the lone wolf must look out for itself without the support and companionship of the pack.  Similarly, a child eventually grows up and moves out on his or her own to make a way in life.  As Mr. Mamis pointed out, parental cautions go with you and quietly but strongly affect how you conduct your life, including your investing.

An investor should pattern his or her investing methods along the lines of a lone wolf.  Become comfortable with making your own decisions and investment choices.  The individual investor must not only ignore the clamoring of the crowd, but also lower the volume on those lingering cautions from childhood.  There are many in the investment community who will want to "help" an individual make investments, whether purchases or sales.  You must keep foremost in your mind that, unlike Mom, it is not your best interests which are closest to their hearts, but rather your investable funds.  There is an old saying on Wall Street: "Stocks are sold, not bought."  Someone is always ready, indeed eager, to give advice and sell you something, for a fee.  Remember, though, it may or may not be the best thing for your investment portfolio.

Al Frank is a well respected investment professional.  He has achieved fame as the editor and publisher of the investment newsletter, The Prudent Speculator.  His newsletter has been read by investors for the past 30 years.  Mr. Frank wrote a book, The Prudent Speculator, on investing in 1989, which he updated it in 1996.  The latest book, Al Frank's New Prudent Speculator, is still in print.  His investing philosophy is value investing in businesses undervalued or overlooked by the market.  We will explore his book in greater depth in later posts, but for now his message about belief is pertinent.  He tells investors to ask themselves, "Does this system generally make sense to me?"  Although the goals are entirely different, your investment strategy is similar, in one respect, to your religious beliefs.   If you are not a true believer, you will not follow the religion's teachings when you must choose a course of behavior.  If you do not truly believe in the investing strategy you pick, you will not follow it when you must choose an investment.

There are many investment strategies:  fundamental analysis, technical analysis, value, growth and contrarian styles of investing, to name but a few.  Many Wall Street professionals bill themselves as followers of one or another of these investment styles.  They promise you investing success and wealth if you pay them a fee to invest your money for you.  You can avoid the cost of the professional if you decide to make your own investments and rely solely on an investment strategy which makes sense to you.  You will be free of the crowd roar and the childhood whispers.  The multitude of ways to invest provide an individual with a smorgasbord of choices.  The investor's task is to find the one that works best for him or her.

Surprisingly, it is not difficult for a person to make investments which are appropriate for the investor's goals once he or she has formulated a comprehensive, coherent and cohesive investment strategy and implements it consistently.

Wolves are instinctively pack animals and hunt together.  The lone wolf must fend for itself and hunt alone.  Once the individual investor can make his or her investment decisions based on a strategy he or she believes in, both the noise of the crowd and the inner parental warnings will fade away.  At that point, the individual will find the self confidence to also hunt alone.

In the next and subsequent posts, we will explore all sorts of investment strategies.  Hopefully we will find one that appeals to you.  You can leave a comment by clicking on the comments link below.  Add your comment and pick the "Anonymous" profile for posting.  If you wish, feel free to add your name to your comment.  It will be posted within 24 hours of receipt.

Al Frank's New Prudent Speculator by Al Frank, copyright 1989 and 1996, is published by Irwin Professional Publishing.