The Insider: The Catholic Church divides sins into two principal categories: the venial, relatively minor sins that can be forgiven through the sacraments of the church; and the mortal, which are not so easily forgiven and if not swiftly dealt with will be rewarded with eternal damnation. The mortal sins have been more popularly bundled up as the seven deadly sins: pride, greed, lust, envy, gluttony, wrath and sloth, which are matched by seven corresponding virtues: humility, charity, chastity, patience, temperance, kindness and diligence.
There are a lot more than seven sins in sharemarket investment, but here are my top seven - none of them deadly.
Ignorance: There is so much ignorance in life, let alone in investment, but many of us do little to help ourselves, perhaps out of pride. We don't want to appear stupid so we don't ask stupid questions. But there are no stupid questions. If you don't know, you are not stupid; you just don't know. You would be staggered at what people don't know, so there's no need to be embarrassed, ever.
Trading: Most of us profess long-term investment but abandon it to punt our short-term luck. In so doing we increase costs, inject vastly more risk and find ourselves trying to run with a random herd that will inevitably run away tomorrow. I know men who have never stopped punting and, let me tell you, they do not progress.
Laziness: It is incredible just how little work some of us do before we invest. Doing one hour's work on a stock puts you in the top 99.999 per cent of people who know anything about it. But do we do it? No. Everyone wants instant gratification: returns without effort; returns without even having to think. Doing some work turns punting into investment. And even if it doesn't ensure returns, it will certainly save you a world of damage.
Chasing: Playing the latest trend, hot tip or hot sector means chasing the herd. There is nothing reliable, predictable, easy, satisfying or scientific in the herd, apart from the fact that it will prompt us to overpay for something in which the rest of the herd is momentarily interested. A Porsche is a sexy car, but the only reason you would pay $500,000 for one is if someone else is going to buy it off you for $500,001. But the chances are they won't - you are the only one that thinks they will.
Believing: I can't tell you the number of times I have lost money listening to other people. Do yourself a favour: never trade on blind faith and view every offer of inside information as a poisoned chalice. It usually is. How rich I would be if I had only ever invested on the back of my own labour and had never heard anything that purported to be a tip, a dead cert or inside information.
Haste: I love the sharemarket, but like any love affair, the relationship only blossoms if you pay it attention. You can't do justice to anything without giving it time. Time is the most valuable commodity known to man. But we load ourselves with tasks. I am writing this after midnight. What on earth am I doing? If I resent anything on my deathbed it will be spending so many of my years in haste.
Suspicion: Call me old-fashioned, unrealistic and naive, but I preferred a sharemarket that worked on "my word is my bond". I preferred it when people sued you because they should rather than they could, when people did or didn't do things because they cared about what people thought of them. I liked the market before anonymity, before it was assumed that we are all bent. I liked it when people had respect and when people valued character.
The seven "sins" spawn seven virtues. They are: knowledge, long-term investment, hard work, patience, independence of mind, taking time and trust in your fellow man.
OK. That's enough of that pompous crap. Who's got a hot tip for me?
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