Right but not Perfect


How do I do this? How do I write a post called “Right but not Perfect” without sounding like a jerk, like an egotistical self-centered idiot? Well, I don’t know that I can. You have to have a certain amount of all of that in order to put yourself out there and say “I have answers.” If I’m going to criticize others I better be able to back that up, otherwise I am a jerk.

Anyone offering advice, be it financial, personal, business, or otherwise, is saying “I know better than you.” That’s ok because sometimes they do, other times it’s just a second opinion, a different perspective than you have.

Financially speaking I’ve done well. I’ve made mistakes but they weren’t catastrophic, they didn’t do irreparable harm, or really any noticeable harm. I’ve been right about a lot of things such as the housing bubble but I was also wrong about the housing bubble too.

What? I was right and wrong? Yup, and lucky too.

I’ll start with a big mistake that could have had serious ramifications. When I got my first job out of college I immediately went out and bought a Jetski. Jetski 750SXThis could have been the start of a reckless spending spree, a lifestyle I couldn’t afford but it wasn’t, because I made a deal with myself. I told myself I would buy the Jetski but save aggressively after that. I stuck with my plan!

In 1995, at the age of 25, I bought my first home, a townhouse. My aggressive savings paid off and so did my parent’s help, letting me live in their house rent free. It happened to be pretty much the bottom of the market. That was just luck. I had a roommate to help defray the costs, that was smart. In 1997 my girlfriend, Julie (yeah she’s my wife now), moved into my townhouse because the home she owned (purchased when she was just 23) had burned down, that was really bad luck.

House FireWe invested part of the insurance money as the house was being rebuilt and doubled it. Partly luck, partly good judgment, it was a highly risky move but it paid off. We didn’t go overboard when the house was completed, buying furniture and expensive electronics, we were frugal, we lived well below our means, something that continues to this day.

In 2000 we bought our first rental property at the Jersey Shore. I thought it was the height of the market, that home prices couldn’t go up any more, that was dumb. As prices continued to rise I could have cashed in but I didn’t. I was right in 2005 when I wanted to sell and wait until prices crashed to buy again but I didn’t. Was it a mistake? Maybe but I’m not going to complain about a successful investment because it could have been more successful.

When it comes to stock investing I’ve done well, too, but made serious mistakes. Not one, not two, but three stocks I owned have gone completely under. I lost everything I invested in them but I knew the risks and didn’t lose my shirt. I had a comparatively small percentage in each stock. As the saying goes, I didn’t put all my eggs in one stock basket. Again, I had a plan and I stuck with it. Those losses caused me to completely rethink my investing strategy and now I subscribe to what is known as passive buy and hold investing (though I think passive is a misnomer).

My second rental property has lost value, a substantial amount of value. Here again this could be considered a mistake but once again I knew the risks. I wasn’t trying to time the market, to buy at the bottom. I assessed whether I could afford it, whether I would make money in the long term, not the short term. If that meant I had to hold it for 5, 10, 15 years or more I was ok with that. I had a plan and I stuck to it. I’m three years into the investment and it looks like it will be closer to 10 years that I’ll need to hold onto it. That’s fine.

I haven’t been perfect but no one is. I’m satisfied with how things have turned out so far and I’m looking forward to the future. All I can do is give you some insight into my success and my failures and let you be the judge of whether I’m someone who can offer you anything worthwhile. 

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