Investing As A Sport?

By: David Leonhardt a.k.a. The Happy Guy

I said last week that money doesn't generally buy happiness, but the lack of it can buy absolute misery. This, by the way, is not just my personal observation. It is the conclusion of some of the most respected happiness researchers (Yes, there is such a thing -- read my book.)

The trouble is that we have to pay attention to money more when we lack it than when we have it. This doesn't seem fair, but the Lord works in mysterious ways. Most people are invested in the stock market, either directly or through mutual funds, pension plans or some other vehicle. So it is hard not to be part of the Panic Crowd. But I ,in all my financial wisdom, have two golden rules to offer. These may not make you rich, but they will keep you happy.

Number One: Place your investments in the safest vehicles possible (Do as I say, not as I do!) and forget about them. When the next recession ends, take inventory and see that you still have investments. Most of us don't get a rush out of watching our investments plunge or yo-yo up and down. Most people are happier when they forget they even have investments.

Number Two: If you are one of those people with a terminal case of Itchy Trading Finger, then you probably would not be happy ignoring your investments.

Place aside what you need for the long term, such as retirement if your heart lasts that long. Don't play with this money. Don't touch it. Trade only with "extra" money. The rest of you are asking, "What's that?", but Itchy Trading Fingers know what I'm talking about. They view stock trading as a sport.

In fact, stock trading is a sport. Much more than, say, hunting. Think about it. In a sport, two equal opponents square off against one another. "Let the best one one win." Each faces the same challenges. Each is armed with the same weapons. Each has an equal chance of feeling the thrill of victory and the agony of defeat (unless, of course, you happen to be the Tampa Bay Devil Rays).

Imagine the play-by-play if hunting truly was a sport: "Man is closing in. He's coming up from behind and rounding to the south side. He's raising his rifle. Deer doesn't even appear to notice. Oh, I can't watch. This is going to be a massacre. Wait! Deer has just bucked up and twisted. He spins around a tree, and -- look! Deer has a rifle too. He aims. He shoots! He Kills!!! Man is down. What an upset, ladies and gentlemen."

In real life, Deer doesn't win very often. In fact, I estimate that Man is about 4.3 gazillion times more likely to be defeated by his own team mate than by the opposition. We call this "friendly fire".

Contrast this to Itchy Trading Finger, who stands an equal chance of striking gold or of moving into a cardboard box on the street corner. The stock market truly is sport, for those who choose to treat it that way. Which is why it is so important to put aside -- in safe, secure investments -- the money you feel you need for your future. That way, when Itchy Trading Fingers retire, they can move out of the cardboard box.

For the rest of us, we are happier getting our sport watching monster trucks crush WWF actors. Oops! There I go again, mixing my sports and my metaphors, not to mention ignoring several federal safety standards. May your investments be safer than my WWF friends, and may you sleep well at night.

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