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Tom Armistead
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I'm a well-informed retail investor and post on SA in order to expose my thought process to critical examination and comment from readers. It makes me a better investor. I'm particularly proud of bullish macro articles posted in 2009 and later, in which I presented ideas that encouraged me to... More
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Tom Armistead's Instablog
  • It's Not Yours Until You Spend It 6 comments
    Aug 1, 2013 9:10 AM

    (click to enlarge)

    Earlier this year I took a sabbatical from the market, placing my discretionary portfolio in cash, and ventured out onto the Appalachian Trail. "Stopsalot," one of my fellow hikers, a retired computer programmer (from IBM), age 63, offered an observation on wealth, and stock market profits:

    It's not yours until you spend it.

    "Fast Eddie," a retired surgeon, age 70, concurred. There is wisdom in this line of thinking.

    My Experience

    From 2001 until the market crash in 2008-2009, I was a conscientious value investor, beating the market by 10% per year, and reinvesting the proceeds. Regrettably, I didn't respond correctly to early innings of the financial crisis, and suffered punishing losses. I have since made the money back, by dint of applying leverage during the extended period of under-valuation that ended earlier this year.

    But looking back, the thought is, why the hell didn't I just spend some of the goddamn money? If I would have spent it, I wouldn't have lost it in the market.

    So my wife and I, when we consider buying something we want, or doing something we want to do, tend to rationalize the spending on the grounds it's better to enjoy the money than to leave it out there for the vicissitudes of the market to gnaw away at it, and chow it down, and so on and so forth.

    Jesse Livermore

    The famous speculator died a suicide, but not before making (and losing) several large fortunes on Wall Street. Famously, his short-selling during the crash of 1929 was so notable that J.P. Morgan called to ask him to stop it.

    He left behind a set of principles for speculating, and his thinking is still worth a look for anyone who is interested in an aggressive approach to trading the market.

    One of his principles was, to spend money when he had it. Otherwise, there was no point to making it.

    It's not yours until you spend it.

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Comments (6)
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  • lucilio
    , contributor
    Comments (4) | Send Message
     
    It's simply a great comment. Very sensible.
    1 Aug 2013, 09:22 AM Reply Like
  • expatsp
    , contributor
    Comments (199) | Send Message
     
    Wise words, and beautiful photo Tom. I'm glad you took some time off for hiking, and glad too you're been back posting on SA.

     

    Dan
    1 Aug 2013, 09:24 AM Reply Like
  • Tom Armistead
    , contributor
    Comments (5219) | Send Message
     
    Author’s reply » Thanks for the welcome back. I just submitted an article on analog semicomputer stocks, as dividend growth prospects, quite a bit of work involved, since I haven't looked at that area for a long time.

     

    I seem to be moving away from insurance/financials toward dividend growth topics, but it takes a while to build up background on the various industries involved.
    1 Aug 2013, 09:52 AM Reply Like
  • circesdad
    , contributor
    Comments (9) | Send Message
     
    Tom, so glad you're back and to see you posting again. Emulating your diagonal spread strategy has been a practical, profitable and easy to maintain addition to my investment adventures. Thank you for all you have written on the subject. Will look forward to all of your future posts.
    4 Aug 2013, 12:01 PM Reply Like
  • Tom Armistead
    , contributor
    Comments (5219) | Send Message
     
    Author’s reply » Thanks for the welcome back. I appreciate your kind words and hope the strategy keeps working for you.
    4 Aug 2013, 12:30 PM Reply Like
  • SkipK
    , contributor
    Comments (950) | Send Message
     
    love your instaposts. very helpful and insightful.
    3 Nov 2013, 12:09 AM Reply Like
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