By Peter Hardell
Though the nation seems obsessed with mutual funds, more individuals are discovering that pulling the trigger on stock ownership is more thrilling. If not always more profitable.
It's every man's dream of being the great hunter, dropping a charging rhino at the last second. Staring down impending death has a very mythical quality to it. Truth is, most of us would drop and run if we were that close to being impaled like a weenie on a roasting stick. It's easy to pull the trigger if you're just target shooting or hunting bunnies, but it takes nerves of steel to pull the trigger when your life depends on it.
That's why the small mutual fund investor usually goes and looks for the best hunter with the biggest guns on the street. He wants someone with a black heart who is willing to trek into the jungle of Wall Street and mercilessly track down and kill the biggest profit possible. By nature, he doesn't care how cruel a fund manager is at his sport, or how he stalks and kills his prey, as long as he's profitable.
The reason small investors are so heartless is because they don't want to take the responsibility of making their own investment decisions. Frequently the mutual funds advertise themselves as caring custodians of your assets, working for you, one investor at a time. Wrong! They're only interested in making money. With
Frequently, small investors pick up the latest issue of
magazine and make their investment decision by reading what fund manager has the hot hand and is bagging the biggest profits. That way, responsibility for their investment actions are thrust upon whomever they entrust with their money.
take on responsibility comes to mind: "Responsibility is a detachable burden easily shifted to the shoulders of God, Fate, Fortune, Luck, or one's neighbor." Or in this case, your mutual fund manager.
I'd rather take responsibility for my own investment decisions. We all make mistakes, but I will no longer allow someone else to lose my money. And I speak from experience. I've played the mutual fund game, but I might as well have been playing
. Yes, I took a chance, and did not pass GO or see any real profits. Of course, the upside was that I also didn't have to pay any income taxes either. After years of frustration, I realized that I could invest my money far better than many mutual fund managers and have proven it.
So, what can the big mutual fund manager do that the small investor can't? Not much. The power of big money can get them an appointment to visit company CEOs and call management when needed. Money can also buy a lot of economists and analysts too. But the information they get is now available to us too.
If we do our homework, gather information, follow brokerage reports, get analyst up- and downgrades, check news sources and read company reports religiously, then we can perform just as well as the big boys. With the power of this revolutionary information age that we have at our fingertips, we can hunt with the best of Wall Street. Often, we can hunt better.
After everything is said and done, the only thing left to do is pull the trigger. Pulling the trigger is probably the hardest part of being an investor. The big mutual fund manager has a ton of money and can fire away at will. So what if he misses, he has the firepower of a shotgun and can still drop a stock.
We smaller guys have to make every shot count. If we miss too often, we will be impaled on the horn of the charging beast. It's funny how we can easily give our hard-won money to someone else to invest, but are paralyzed with our finger frozen on the trigger of responsibility when picking off a stock that we want to buy. Why? Because it's easier to blame someone else for a bad decision and shift the burden of guilt to them.
How does one get over the psychological fear of making a bad investment that rots our brain into nonaction? It's like anything else: practice, practice, practice. The best hunters in the world didn't get that way naturally; they practiced perfecting their shooting style. Yes, you will miss a few shots -- everyone does. But remember, you can't bag the big one unless you pull the trigger.
Peter Hardell, an individual investor in Santa Rosa, Calif., is an occasional contributor to