And our perception of it is even funnier. 

Well not really.

Our perception of it is wrong. 

We perceive that somehow there is a connection between a company and its stock price, as if the company somehow controls the price of its stock.

It doesn’t.

Investors – you and me, we control the price of the stock, through our buy and sell decisions. 

It does control the dividends that are paid out, but it doesn’t control the price of the stock.

So, the next time you are tempted to buy a stock because you “think the company will be successful,” try saying to yourself instead “I am buying this stock because I think I am one step ahead, and have figured out the emotions of the thousands of investors who happen to be buying and selling this stock as well.” 

Why try this?  It gets back to the conversation I had with an investor earlier this week.  Stay tuned.

Have you ever created your perfect day?  Do you know what your perfect day might look like, have you lived it?

Every 6 months or so, I create my perfect day – sometimes it’s in my mind, sometimes I get to live pieces of it, but I choose it, describe it, and tell people about it.  Therapeutic in nature, being able to describe your wants and desires in one day can tell you a lot about yourself, how much you’ve changed, and frankly, if are you even close to living out this perfect day.  Living in fantasyland isn’t helpful or productive for most.  However, living far from your fantasyland can be destructive and create unhappiness.

The day can start early in the morning for some or after a lazy morning for others.  I like to choose the weather – always summer for me, designate the time I wake, and exactly who I spend the day with and for how long.  Remember, in a perfect day you get full control.  Don’t forget to include the meals you’ll eat that day.  I always pick my favorite foods.

I’m a dreamer.  I like to live on Fantasy Island, but I’m also a realist.  I try and live out pieces of my perfect day every day whether it’s go to the gym, walk the dog, or step outside when the sun is shining.  I make sure my perfect day isn’t that far off from my reality.  Otherwise, I’m not living a life I’m choosing but rather one chosen for me and I can’t think of a worse perfect day.

A couple of days ago I suggested that you needed to take the numbers game called “Sudoku” seriously if you were to become a successful investor. 

In yesterday’s Wall Street Journal, a book review on the very subject appeared, titled Taking Sudoku Seriously.   

Okay, Okay, the book review didn’t directly correlate Sudoku with investment success, but it was an interesting article, nonetheless.

What does Sudoku have to do with successful investing and reaching your financial goals? 

Not much, you say?  Well, I’m with you. 

I’d be hard pressed to present any evidence of any correlation between reaching your financial goals and mastering the the game of Sudoku. 

But, what happens if we exchanged some words on the above statement?  It would read something like this. . .

What does (following the stock market, picking top companies, keeping up with world events and economic news) have to do with successful investing and reaching your financial goals? 

Not much, you say?  Well, I’m with you.  I’d be hard pressed to present any evidence of any correlation between reaching your financial goals and (following the stock market, picking top companies, keeping up with world events and economic news). 

Ah, now you probably aren’t so ready to agree with the above statement. 

I can assure you that the entire industry of Wall Street would vehemently disagree.  Why do I know that?  Because they continue to bombard society with the opposite notion – that (following the stock market, picking top companies, keeping up with world events and economic news) IS important to you reaching your financial goals. 

Did anyone watch the recently completed Australian Open Tennis tournament?  Financial firms flooded the advertising airways with the myth that somehow (following the stock market, picking top companies, keeping up with world events and economic news) is vital to your success. 

One ad in particular caught my eye, that of a gorgeous young woman standing on a beach with her iPad in hand, checking charts, stocks, graphs and trends.  Who sponsored the ad?  Fidelity, of course, in conjunction with Apple. 

Hmm.  If our culture says it is important, it must be important. 

Or is it? 

After ignoring Wall Street, let’s get on with our life one blog at a time … by Julie Klingler

We could all use a gut check from time to time.  MSN posted an article last week that had me wondering if we as consumers were still practicing caution amidst uncertain times and during the summer, NPR reported an alarming statistic, 64% of Americans couldn’t pay for a $1000 emergency if it occurred right now in their lives.

Times have been tough and with that come decreases in emergency funds, college plans, and retirement accounts.  However, when things start to look positive on any economic front, these funds don’t always get replaced and sometimes we lose our way when a monetary increase occurs.  It’s time to refocus and get back to the basics.

Rome wasn’t built in a day, our impatient nation needs to be realistic and practice down to earth savings: build an emergency fund that can take care of our families and be honest with the financial plan we’ve set for ourselves – stay on the retirement track and continue to pay down debt.

Be patient, steadfast, and refocus America.  We’ve got a long way to go.

This thing called “investing” is a strange animal.

Somewhere along the line we got it all mixed up, and I am not quite sure how it happened, or how we can untangle it. 

First, let’s start with an assumption. . .

For the most part, our “investing” decisions” are made with retirement in mind, or at least building a nest egg to support ourselves when earned income stops. 

Of course sometimes we will use this money for other things like paying for college educations, buying new homes, and so forth.  But for the most part, “retirement” is the focus. 

With that in mind, what does “playing Sudoku” have to do with “investing” for retirement? 

Say what?

That’s right, what does “playing Sudoku” have to do with investing for retirement? 

“Not much,” you say?

Well, maybe somebody could come up with a logical explanation why playing Sudoku could positively impact your investing decisions today and the quality of life during retirement, but it would be a stretch. 

And yet our culture is obsessed with playing Sudoku as a means of investing wisely and preparing for retirement.  Why is this so? 

See, I told you this thing called investing is a strange animal. . .

Stay tuned.

The sensible solution would be for investors to put their money into low-cost index funds and just keep it there. But that’s hard to do when the market is extremely volatile. Most of us find it difficult enough in normal times to take a long-term approach. So when prices are rising and falling two per cent a day, and when it seems like getting in or out of the market could be worth ten per cent of our portfolio’s value, the temptation to try to time the market is hard to resist. (The way the financial media covers the stock market—with each rise and fall treated as a major event—only exacerbates this problem.) Unfortunately, the same psychological forces that make investors bad at rating money managers also make them bad at market timing: all else being equal, they’re prone to sell at the bottom and buy at the top. And, the bigger and more dramatic the swings in the market, the more likely we are to make the wrong decision.

James Surowiecki  The New Yorker 

I am heading out the door to enjoy the slush of Seattle.  But before I do, I wanted to share this article with you – a thoughtful reflection of 2011, that includes some sage advice, highlighted above.

After ignoring Wall Street, let’s get on with our life one blog at a time … by Julie Klingler

Yes, that’s right, I said “snowing” down – it’s my version of slowing down due to the great snowfall we are receiving here in the Pacific Northwest.

There is nothing like 8 inches of the white stuff to wipe away to-do lists, deadlines, and should-do lists, nothing seems to matter when driving is treacherous and the roads are littered with abandoned cars.

It’s a nice time to reflect on the deadlines we put on ourselves, the importance we put on things just not that important, and the obligations that we really don’t have to keep.

Snowfall has a way of forcing our busy lives to slow down, focus on what’s important, and enjoy the company of those we love – sled down the local hill with your children, walk to the store rather than drive, and make cocoa in the afternoon just because.

Stay warm and be safe out there.

Now, it might seem like I am oversimplifying the obvious by focusing on saving (and spending) as an important component to building wealth, ignoring Wall Street and getting on with our lives, but as we begin to think about this subject I think you will agree with me that the emotional complexity of saving, combined with the magnitude of its importance, is something many of us need to look at and evaluate. 

This passage is taken from my book, The New Coffeehouse Investor, and sums up the role “saving and spending” have in building long term spiritual, emotional & financial wealth. 

I am putting a strong emphasis on “financial education” in the coming year, and want to start by putting a few things in perspective. 

In the world of investing and building wealth, which presumably go hand in hand, we have become obsessed with things that aren’t really that important when it comes to reaching our financial goals.

What is important is how we put this thing called “saving” into perspective in our everyday lives.

To start, I came across this article by Megan McArdle, who provides an interesting reflection on the importance of Saving in the New Year.

When writing a post on this blog, I usually quote a passage or statistic to document a point I am trying to convey to you. 

Today I don’t have any statistics to support what I am about to say next. . .

The average (intelligent) investor is clueless when it comes to investing. 

That is not a put-down, or a criticism of anyone.  It is simply a fact, based on countless conversations and connections I have had with investors over the years.   

Just like I am clueless when it comes to repairing a computer or trying to understand a chemistry problem, the average intelligent investor has no idea what a bond fund is, no idea what a stock fund is, and how these investments react to varying forces that drive the prices and returns. 

For instance, at the end of 1999, I bet the average investor would have suggested that the reason the stock market’s ten year return was so phenomenal was because of the dynamic forces within the economy, specifically the technology sector.

WRONG.  The reason the stock market was so strong in the 1990s was because of the expansion of the P/E multiple. 

I bet the average investor who witnessed the great returns of bond funds over the past 10 or 30 years could not correlate that to the precipitous drop in interest rates.  

Simple and straightforward education.  That is why I created Coffeehouse and why I wrote the book. 

Even though I started this journey almost 20 years ago, my job has just begun. 

With that in mind, I am going to make 2012 the year of “renewed education” at the Coffeehouse. 

Stay tuned.

I help people grow older. 

At least I help them grow older in one dimension of their life. 

I provide clarity and wisdom in managing their financial resources so that they can continue to live their lives throughout retirement free from financial worry. 

I suspect that living these years free from financial worry provides other benefits as well, like better health and emotional freedom to pursue and enjoy a broader array of life’s adventures.

I am fascinated with this thing called “retirement,” in part because it is still such a new concept for human beings. 

We are still trying to figure it out.   Financially and emotionally. 

Every day in my work at Soundmark Wealth Management I engage with people who are planning for retirement sometime in the distant future, getting ready to retire, or are retired. 

It always interests me to see how they prepare for a 20 or 30 year period of unemployment which society labels “retirement.” 

I came across this article that offers a thoughtful look at living a full life as we grow older. 

Hope you enjoy it, and feel free to add your comments on growing older yourself.