What do great investors say?

I listen to the Dave Ramsey show everyday – well, as much of it as I can while driving home from work.  Dave is a smart, common sense guy, and he says a ton of stuff that I agree with wholeheartedly.  You will not go wrong if you follow his advice, and I strongly urge you to listen to him (podcast available on website) and to check out his website at DaveRamsey.com.

Let me put it this way, if more people had listened to Dave and followed his advice, this current financial crisis would not have happened.  The current crisis (I keep saying “current crisis” because the government ALWAYS has some crisis – it’s the way they convince you to go along with stupid ideas that you’d normally spit on) was caused by government policies which encouraged people to borrow too much money.  Period.

Dave has always encouraged (and encouraged is too mild of term!) people to get out of debt.  All debt.  No exceptions.  And he gives great practical advice  on how to do it.  His plan works, and it will also eliminate those fights about money with your spouse.  I know from experience, because my wife and I get along much better since we started following a written budget.

Go to his site, download the podcasts, listen to him live, whatever works for you.  But you need to listen to him and follow his advice.

After having said all of that, there are two things he says with which I disagree.  This is not meant to antagonize anyone, but simply to say that I don’t think Dave is 100% right on his advice.

  1. Dave is a Christian, and he encourages people to tithe literally.  10% off the top to your church.  (I’m a benevolent Atheist, who thinks that religion is one of mankind’s greatest vices.  But that’s my opinion, you are free to practice whatever faith you wish.)
  2. Buy and hold investing.  (See my previous post Bye-bye to buy and hold for the basics of why I disagree with that philosophy.)

The point of this post is not to point out the area’s with which I disagree with Dave, but to talk about something he posted on his website today.  He posted a link to a report called “The Wisdom of Great Investors” which supports his long term buy and hold advice.  (I assume it’s all about buy and hold from skimming through it.  If it is what it looks like, I’ll post again and tell you why I think they are wrong.)

On a side note, I admire Dave Ramsey for “practicing what he preaches”.  The report is free, and neither he nor the company who allowed him to distribute it are making any money off of giving it away.  Dave said that he doesn’t have any relationship with the company, and I believe him.

In case it’s only on his site for a limited time, you can also read the report here.  The Wisdom of Great Investors.  (Since they’re distributing it free, I assume this is ok.  If Davis Advisors asks, I will remove this link since it is their report.)

But I’m going to read the report later and not simply tell you what I think is wrong in it, but why I think it’s wrong.  After all, if I simply state an opinion, so what?

But if I can explain the reasoning behind my opinion to you, maybe I’ll convince you that I’m right and change your attitude and behavior regarding investing.  And that will lead you to change your attitude and reasoning towards money, which will lead you to change whatever monetary theory (if any) you currently hold, and perhaps I’ll eventually convince enough people that we can change the government back to something approximating what the Founders intended it to be.

I know it’s a long shot, but I have to try.  One step at a time, I hope to get people to think rationally, and not simply instinctively react to what happens.

gk

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