Four Little Words

“You just don’t understand.”

When you hear that phrase in a relationship, pay attention. Chances are, you’ve missed something important.

But when you’re looking at an investment and someone tells you this, grab your wallet. Chances are, you haven’t missed a thing. They’re either pulling one over on you, or their model is too complex for its own good.

Over the last dozen years we’ve seen multiple companies tell us that their business was too sophisticated for the average investor to understand: Enron, Worldcom, or even Microsoft. Peter Lynch says that you should invest in firms that any idiot can run–because eventually one will. If the plan can’t be diagrammed in crayon on the back of a napkin, it’s probably too involved.

A lot has been written about the demise of Bear, Lehman, and Merrill, but a big part of the problem was that their firms looked more like Rube Goldberg machines than financial warehouses.

When a partner tells you that you don’t understand, it’s time to listen harder. When someone in the market says the same thing, it mat be time to walk away.

Douglas R. Tengdin, CFA
Chief Investment Officer
Leave a comment if you have any questions—I read them all!

Follow me on Twitter @GlobalMarketUpd

direct: 603-252-6509
reception: 603-224-1350 •
By | 2014-09-03T21:07:29+00:00 September 16th, 2008|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

Leave A Comment