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May 08, 2006
Bora Bora
One of the central tenets of the way I teach people to invest their money is that emotions are an investors worst enemy. 80% of the battle is in controlling your emotions.
Our emotions, fear and greed, combined with our natural herd instinct, causes us to buy when we should be selling and sell when we should be buying, when in fact, we should be doing the opposite. Successful investors like Sir John Templeton, George Soros, and Warren Buffett have all made fortunes by buying when others are fearful and selling when others are exuberant.
One way to limit your emotional responses is to limit the information you allow to enter your brain. We tell our students not to watch stock prices or the news on their stocks from day to day, or even month to month.
Think of it this way. Exxon Mobil has a market capitalization of over $400 billion. It's current stock price is around $64. Let's say XOM loses $10 a share over the next two months. Do you really think the long term financial prospects of a company that big can suddenly turn that much in the space of 60 days? Of course not. It is all noise. It may be important to a trader but investors should not care about the short term movement in stock prices - ever.
To help people stay away from tracking short term prices, following news and reacting emotionally to noise, I coined the phrase "going to the caves of Bora Bora". In the Snider Investment Method, we make adjustments to the portfolio once each month. The rest of the time, we are in the caves of Bora Bora. In other words, there is absolutely nothing we should be doing between "trade days". We are in the caves of Bora Bora where there is no TV, no radio, no newspaper, not fretting - relaxing and enjoying life.
Over time, the metaphor has taken on a life of its own and come to mean more than just not paying attention to the noise. The image of Bora Bora has also come to represent the things we are able to do as a result of being a successful cash flow investor. For some people Bora Bora is time spent with their family. For others, it is the places they are able to travel or hobbies they are able to pursue. But for all, Bora Bora represents a sort of piece and tranquility that comes from being financially secure.
As Bora Bora has come to mean so many things to our 2500 Snider workshop graduates, I have started receiving postcards from Bora Bora, Bora Bora t-shirts, travel brochures and all manner of things with Bora Bora on them from our students. Now there is a song to add to the Bora Bora collection.
Suzi Ferrante, one of our students, wrote a little song. 50 of our die hard Snider Method investors were on a cruise together in April - not in Bora Bora, but in the Caribbean - including Suzi and her husband Russ. Suzi put together a willing ensemble and after a little practice (let me stress little), they sang the Bora Bora song for the rest of the group. We captured the only live performance of the Bora Bora Song, as sung by the founding members of the Bora Bora Society, for posterity. Have a look: (NOTE: The play button will appear in the top right when you move your mouse over it.)
The words are a little tough to decipher, so in case you want to sing along, here is the crib sheet:
Stay in Bora Bora
By Suzi Ferrante
Won’t you stay in Bora Bora (Bora Bora)
We can walk along the sand beside the sea.
Where the TV’s don’t get CNBC
There’s no brokers callin’ for me,
We’ll just sit under the coconut tree, in Bora Bora
Chorus
Oh, no one seems to worry in Bora Bora (Bora Bora)
It’s such a beautiful, relaxin’ place to be.
We’ll live out all our dreams in Bora Bora (Bora Bora)
Oh, won’t you stay in Bora Bora with me.
Won’t you stay in Bora Bora (Bora Bora)
We’ll take time to count the stars up in the sky.
We don’t care if our stocks aren’t high,
No one’s tellin’ us to sell or buy
We just drink another Mai Tai, in Bora Bora
Chorus
Oh, no one seems to worry in Bora Bora (Bora Bora)
It’s such a beautiful, relaxin’ place to be.
We’ll live out all our dreams in Bora Bora (Bora Bora)
Oh, won’t you stay in Bora Bora with me
TIP OF THE HAT:
My personal thanks to Suzi Ferrante for her passion and creativity, to the Bora Bora Singers for being such great sports and to everyone on the cruise for being such great advocates of the Snider Investment Method..
Kim Snider, Kim Snider Financial Communications, Chronim Investments and/or Snider Advisors make no representation that the information and opinions expressed are accurate, complete or current. The opinions expressed should not be construed as financial, legal, tax, or other advice and are provided for informational purposes only. Call 866-952-0100 to request the Snider Investment Method™ Owner's Manual, which includes a description of the Snider Investment Method, investment objectives, risks, suitability and other information. Please read and consider carefully before investing. All investments are subject to risk including possible loss of principal.
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Focus of This Blog
Kim Snider is an author, speaker and host of Financial Success Coaching, Saturdays at noon, on KRLD Newsradio 1080, Dallas - Fort Worth. This blog is primarily devoted to empowering individual investors with information to help them be good stewards of their money. Above all, it is about achieving true financial success. Kim's book, How To Be the Family CFO: Four Simple Steps to Put Your Financial House in Order is in bookstores now. Order yours from Amazon or other fine booksellers today.
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