I always thought Dick Fuld, the chairman and CEO of Lehman Brothers (my former employer), was an arrogant S.O.B. But I’m not really taking any pleasure in his being scapegoated for the current financial crisis. Lehman wouldn’t have failed if the government hadn’t decided to stick to a “tough love” approach for all of 24 hours — just enough time for Lehman to crash and burn — because the bureaucrats couldn’t comprehend the impact that would have.
Dick Fuld I’m also irked by “regular people” complaining about how the economy was ruined by rich meanies like Fuld, while they, the regular people, were innocent victims. In my experience, a lot of regular people are regularly greedy and regularly stupid and regularly looking for a get-rich-quick scheme. If regular people weren’t greedy and stupid, Las Vegas would revert to an empty desert. Nigerian princesses would stop emailing me requests for wire transfers and calling me “Darling.” But, as P.T. Barnum may or may not have said, there’s a sucker born every minute.
Regular people regularly invest in stupid ways. The guidelines to sensible investingcan be boiled down to:
- Buy low, sell high.
- Don’t invest more than you can stand to lose.
Easy, right? Notice that the list does not include, “Buy high, then pray really hard for it to go even higher.” Then why do regular people regularly overextend themselves, pouring their kids’ college money (money they can’t stand to lose) into stocks, real estate and commodities that are already sky-high? As Joseph Kennedy pointed out, when the shoe-shine boy is giving you stock tips, it’s time to sell.
There’s a reason it’s “Main Street” and not “Genius Street.” Nowadays, numerous regular people are asking me how to buy gold. They’re not asking to purchase my beautiful jewelry, unfortunately. They want to buy gold as an investment. The best time to buy gold would have been in 2001 when it was below $300 an ounce. Now it’s over $900 an ounce, a bit below the all-time high it hit earlier this year when it surpassed $1,000 an ounce. But all the regular people tell me they read/heard/dreamed it would hit $2,000 an ounce next year. I don’t rule that out. Anything is possible. If you gamble on that and win, I’m happy for you. But how is this different from buying a house during a real-estate bubble and praying that the bubble will get even bigger? Or buying Lehman stock at its high and hoping it will go even higher? You’re only investing because everyone — including the shoe-shine boy — is doing it and you don’t want to be left out.
When I try to talk to people about their gold-buying plans, they don’t want to listen. The fact that I have closely monitored gold prices on a daily basis for four years means nothing to them. It wouldn’t be so bad if regular people had the sense to sell at the right time but, in addition to being greedy and stupid, people are, well, greedy again. If they’ve made a profit, they want to make a bigger profit, so they hold their investments too long, miss the peak and end up riding the wave all the way back down. If you want to invest, you can be a bull or a bear — just don’t be a pig. I say this as someone who sold her Lehman stock just below its high. Right before I made the call, I thought, “Should I wait and see if it goes back to the high?” Then I said to myself, “Self, don’t be a pig. Sell now.” Earlier this year, I basically said the same thing out loud to a dude who bought gold in the high $900s. Gold had just broken $1,000 so I said, “Why not sell now, get your slight profit and repurchase when it goes below $900.” But no, he just had to keep it. It’s been below his purchase price ever since, though it’s creeping back up there. Maybe it will go to $2,000 and he will feel vindicated, but you know he’ll probably hold out for $3,000 an ounce and ride it back down to $300.
An average investor Personally, I bought gold — for use in my business, not a long-term investment — when it fell to $750 an ounce last month. I figured that was as good as it would get for a while. But who knows? This January, I bought platinum at about $1,600 an ounce for some rings I planned to make in the summer because I saw prices were soaring. Indeed, by the time I made the rings in June, platinum was trading at over $2,000 an ounce. Great investment, right? Well, for the moment it was. But now platinum is going for around $1,000 an ounce. Timing is everything. (By the way, if you’re considering making a piece of jewelry in white gold right now, it’s worth your while to upgrade to platinum.)
Gold price chart2000 – present
Anyway, I’m not giving out any more information on how to buy gold. Since these would-be investors are such geniuses, they should be able to find that information themselves, right? From now on, my only investment advice is to buy Wendy Brandes gold jewelry. That way, you’re ahead no matter what happens. If gold goes up to $2,000 an ounce, you’ve got some to sell. If gold doesn’t rise that far — or if you miss the high — you’ve got something beautiful to wear. What’s not to love about that?
Diana Necklace in 18K gold and diamonds© Wendy Brandes 2007-2008
(To order or get more information email wbjewelry at hotmail dot com)
Perfect advice and I’m going for the jewellery to love option when I can afford it.
You are right about the stupidty of the tough love lesson – how pointless was that given the domino effect it caused plus I’ve lost my husband to a 6 am to 10pm or later working day every day as he work for the company handling the receivership for Lehman in the UK – it ain’t pretty.
New slogan should be a Wendy Brandes ring in the hand is worth two in the might happen world of stocks and shares.
I agree 100% with everything you’ve said here about investing (and the greed/stupidity problem).
Wow, WendyB, what a post! I’m not greedy or smart enough to do stocks and investments actually. All I have is money in the bank and some insurance policies. I know I can be richer if I were only braver or greedier but I’m not! So I am content =D But this post is seriously making me think! Oh, and I wish I can buy your jewelry but I don’t trust the postal system in my country. =(
Greed is not an investment strategy and neither is panic. Wendy, I really dig your frankness. And your jewelry is to die for!
Well said Wendy – looks like both you and I encountered similar souls this week. I just posted my own (bit more personal) blurb on a person with economy issues. Why is it that someone who spends their life mismanaging their finances turns on people who took the time and effort to educate themselves about it when things get tough for them? And why is there this perpetual notion that finances are the realm of men? Money doesn’t care what sex you are, it does not care what you do with it, it cares not how you fuck it up. I am with you 1000% percent here. And people have no idea how much you risk and leverage yourself to aspire to build an successful business. Its not all parties and magazine photos. Its damn hard work. the truth is most people wont do what it takes to acquire wealth. You have to invest yourself 7 days a week, 16 hours a day, every day, for years.
Great post. A good read for the end of a shocking week. Thank you.
Candor like this is rare and precious. Like gold! Thanks for a dose of straight-talk that’s been woefully missing from news coverage, and for an interesting perspective on precious metal buy-ups. I’m clearly a know-nothing, as it hadn’t even OCCURRED to me to think gold. Hm.
Did you hear about that guy who punched good ol’ Dick at his gym?
I’m trying to figure out where I read that… maybe the New York Times? It made me feel a tiny twinge of pity for Mr. Fuld.
Also, that’s a truly heinous picture. It’s like a triple-cross between a sneer, a sneeze and sleepyface.
This is a honest post and I love it! I love it as much I love the pic of an average investor lol. I think everybody should buy your gold jewerly as an investment 🙂 Was he really your boss?
I think you’ve said it all here!
When is enough enough?
Well said my dear! It’s always easier for people to blame others for their own financial mistakes. People of ALL financial means get themselves where they’re at by their OWN doing.
You are a smart as you are beautiful and talented, Ms B.
Also, I thought you might be interested in this site:
http://advancedstyle.blogspot.com/
Older folks have style too!
amen.
That was a really interesting post. And I have to say that that photo of Dick Fuld is absolute genius! I LOVE his expression!!
For years people told me I was a dummy for using my money to buy pot instead of investing in the market. I can’t help but feel a bit of schadenfreud now….and, of course, a nice mellow buzz.
Hi there-a fantastic post my dear. Top tips indeed-buy low, sell high, its not rocket science either!! Have a wonderful weekend!
My sentiments exactly. If people are stupid enough to get in over their heads financially, then they shouldn’t get assistance from the government. What ever happened to not spending beyond your means? sigh. If I had the means, I would buy up all your delicious jewelry. Especially the darling squirrel necklace you just debuted!!
Of course! Wendy B jewelry is a fail-safe investment!
I had my stock broker calling me begging to invest around a year and a half ago. I told my parents and they begged me not to. I got pissy but listened and boy am I happy I did. Right now I feel like the only almost safe investments is cd accounts. . . but Wendy Brandes sounds like a reasonable one too, you little saleslady 🙂 I’m going to have to check out your new wares.
you are a true artist!
a kiss :))
HEAR HEAR
Fab advice.. as usual. Love the pig references.
People are always trying to paint themselves as being innocent and they’re not!
It baffles me that people would want to BUY gold right now– hell, I’d like to sell as much as I could get away with! (If I’d making anything near the actual cost per ounce, that is.)
that was a most excellent lesson wendyb. i would certainly never make an investment in the gold market without first getting your input. one should always be open minded enough to take advice from someone with more experience in given area than one has.
Thanks so much for stopping by my blog and leaving me the comment!! 😀
It’s funny, my hubs and I were just talking about stocks today – I tend to get lost while people try to explain how it works.. LOL
Thanks for the good lesson!
I’ll be back:)
I so love your pieces; I own a lot of gold from the Middle East…I keep it mostly as an investment as it is so yellow on my skin…
Sick about the market…
ii captain.
I have enough experience with the currency market fluctuation. We cannot always win. That’s that. I won some and I lost some while moving around the world.
This is the time to see things straight as you’ve written here I think. No frills…
wait for it.. I really want everything you design but with the AUD falling in this fashion I don’t know when I’d have enough to even start owning a little piece.
HIGH 5 all the way Wendy!
After my brief foray day-trading for 18 months during the bubble, I never went back in again..
Gripped with fear of potential losses. I’m not feeling too bad about being a wuss at the moment.
It’s so screwed up what’s going on around the world.
I’m glad I work for the government so I have some job security.
The shoeshine boy comment is so true. When some not-terribly-savvy neighbors of mine started talking about buying investment properties a few years ago because there was so much “easy” money to be made in the booming housing market, I knew it was time to sell mine! And thank God I did…
Absolutely freakin’ true.
Every.Little.Word.