This week is my last week of blogging for the year. I am taking the last two weeks off to, well, do nothing really. Sometimes getting couch ass is good for the soul. I wanted to spend the rest of the week as a year-end wrap-up beginning with the top 10 investing mistakes as so prominently displayed by the professionals all the way down to the average Mr. and Ms. investor.

1. The cure all to life and money lies in a magic bullet solution. At least Obama had the good sense of telling the nation that the recovery will be long. I don’t know why the media and the executives going to Congress hat in hand think that a bailout will solve everyone’s problems over-night. Even if all the governments in the world gave $5 trillion each to everyone, it won’t solve issues overnight.
2. Wall Street and Congress know how to manage money better than us. Hahahahahaha…
3. Trust other people with money- they’re professionals. A lot of poor souls who got caught up in the ABCP mess relied too heavily on their advisors. When the financial crisis hit, too many people opened up their statements to see that the advisors didn’t carry out proper asset allocation or made trades without authorization. Take control of your finances. No one cares about your money more than you.
4. A decline in net worth = a loss. Unless you sold money-losing stocks, you actually haven’t lost money. You are worth less than you once thought but unless you have some situation where you have to liquidate everything, its a paper loss at this point. And the decline of your home? Well, you buy a house to live in. Last time I checked, there wasn’t a lever on the side of your home that printed money.
5. The market is at the bottom/catch the falling knife. Guilty, guilty, guilty. I have bought on two different occasions this year where I thought we reached the bottom only to see the stock fall two or three more levels. As “amateur” investors, we are better to win the race to second than attempt to guess when the bottom has hit.
6. Head in the sand is the best approach. I am going to paraphrase the author Po Bronson who I once heard speak: if we showed our kids how to solve problems as opposed to shielding them from it, we would end up being better parents for it. Same thing with money. We will always have money issues of one kind or another. We have to learn to deal with it constructively.
7. The best product in the room wins. Did you notice that everything that cratered was some exotic financial instrument that, perhaps, 2 out of 100 people could explain? Simple wins the race.
8. The media is the best source of financial information. Bullocks. The media is feed stories by their sources who have an agenda which may not be the same as yours. Use your eyes and ears and to see what’s happening (…and read financial blogs…). An avid shopper could have told you years ago that the Gap had its day before the media ever picked up on it.
9. If in doubt, flee to cash. …which is ok if one didn’t liquidate all one’s position at a loss to get into cash…If you save money and put it in cash that’s find but if you panic and flee to cash from other positions then you’ve made the situation worse.
10. Its different this time. My Dad and I were watching the history channel one night and he turned to me and said: “Good channel but its like watching re-runs after a while. Every person in history seems to make the same mistake.” We have short memories and forget that this downturn is going to play itself in the same way as other downturns (although the scale may be different…). Remember the past since it is a blue-print for the future unless we change our behaviour.