“We are plain quiet folk and have no use for adventures. Nasty disturbing uncomfortable things! Make you late for dinner!” said Bilbo Baggins to Gandalf in The Hobbit.
Which leads me to “Investing Mistakes to Avoid: #9 Hobbyist or Hobbit?” This is a story about a recently retired investor. The hobbyist investor. The most dangerous one of all.
You see, it’s the recently retired investor who, with a fresh outlook on life, thinks he doesn’t need “experts” to guide him. Who yearns for one more bite of the apple. Who imagines himself scoring with artificial intelligence or high-yield debt.
Now remember, our hobbyist has never managed someone else’s money. He’s not a fiduciary by law. He’s never dealt with live fire. But he will read, and read, and read, and study, study, study until his eyes drop out, hoping for that precious ring. His precious. “My precious!”
Then, while touring Versailles, his so very carefully placed trades, as it turns out, were not. The portfolio takes a massive hit. And the hobbyist fears, with the fear one has for Smaug, the conversation he must now have with his beloved spouse.
Action Line: Don’t be a hobbyist investor. Rely on someone you trust. Even if you have all the time in the world. Spend it reading The Hobbit to a grandchild. One chapter per day or night or for however long it takes you to fall asleep. That should cover you for a while.
Read every one of the Investing Mistakes to Avoid here.
