It is unbelievablY easy (and in the grand scheme of it all, relatively cheap) to sit on a couch in an air-conditioned living room, eating pizza and watching Netflix (NFLX) DVDs for hours on end.
And although the health benefits are certain and undisputed, many of us find it hard to exercise, to eat healthy and stay active. We knowingly chose to do the easy thing. Any wonder why 68% of adults are either overweight or obese?
In the markets, successful investment oftentimes requires us to do the tough things, the uncomfortable things, the painful, frightening or humiliating things we don’t want to do, both in terms of what we trade, and in how we manage our positions. The herd by definition takes the easy way out. Doing the hard thing (in a prudent fashion) is what gets a contrarian investor up off the couch.
You might not recall that for most of the technology boom, especially the earlier years like 1996-98, most investors avoided technology stocks, frightened by the high valuations and uncertain business concepts. It was hard to buy Yahoo (YHOO) at a P/E ratio of 1,200. Or America Online at a P/E of 475. But for a while…a rather long while, it worked.
Similarly, early last year, betting on discretionary stocks like Home Depot (HD), Panasonic (PC) or Consumer Discretionary Select Sector SPDR Fund (XLY) was extremely difficult amid horrific retail numbers and widely discussed fears that “the consumer was dead.” Yet many consumer-oriented names went to enjoy a strong year-long rebound.
The point is that when looking for investment ideas, don’t hesitate to consider concepts because of their reputation sector or name, might feel otherwise difficult to buy.
For example, “Lehman Brothers” might now be a dirty word, but many of the trust preferred securities the company created before the downturn have soared lately as investors search for dividends and other portfolio yield.
Lehman ABS 6.00% (JZH), for example, bears the moniker “Lehman” but is dependent on the income distributions from life insurer Prudential Financial (PRU), not the failed securities firm. The security yields 6.39% and is up sharply in price appreciation with other fixed income year-to-date (read the prospectus).
Hard to SwallowMSCI Europe Financials Sector Index Fund (EUFN) – 3 months
Given the abysmal headlines from across the pond, many find it troubling to even consider a security consisting of European financial stocks right now. Yet MSCI Europe Financials Sector Index Fund (EUFN), which holds beaten-down stalwarts like HSBC (HBC), Banco Santander (STD) and UBS (UBS), could easily regain higher levels should risk appetite in Europe improve. Right now it’s nearly impossible to persuade still risk-averse investors on investing in European financials, not unlike buying a dot-com stock in the immediate wake of the 2000 tech crash. It’s just not easy to do.
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In Investing, Do the Hard Thing http://bit.ly/cyE4gb $NFLX $PRU $EUFN $UBS $GJM #mkt #etf #trading #psychology #fund http://bit.ly/cyE4gb
RT @JonathanHoenig: In Investing, Do the Hard Thing http://bit.ly/cyE4gb $NFLX $PRU $PC $HD $YHOO $JZH $HBC $STD $EUFN $UBS $GJM http://bit.ly/cyE4gb #etf #mkt
In Investing, Do the Hard Thing http://bit.ly/cyE4gb $NFLX $PRU $PC $HD $YHOO $JZH $HBC $STD $EUFN $UBS $GJM http://bit.ly/cyE4gb #etf #mkt
In Investing, Do the Hard Thing: In the markets, successful investment oftentimes requires us to do the tough thin... http://bit.ly/94ehMT
In Investing, Do the Hard Thing http://bit.ly/94ehMT
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