Elvis Presley’s genius lives on not only in his music, but through some famous offstage quotes.  The following three are particularly famous.  While they translate to all aspects of life they are especially pertinent to the world of investing:

1.  “When things go wrong don’t go with them”

Don’t let your portfolio spiral out of control

I spend a lot of time here talking about risk management and risk adjusted returns.  Too many investors let the tide control where they go.  They float up or down with the market never knowing where they might go or whether they might drown when the water gets rough.  Use risk management via hedging and position sizing to avoid losing control of your portfolio.  Everyone always wants to be the investor who makes the biggest gains, but as we all learned last year sometimes the smartest investors are the ones who simply avoid the biggest losses.

2. “Don’t criticize what you don’t understand, son. You never walked in that man’s shoes.”

Learn by doing:

You can’t truly understand what you’ve never experienced.   The only way to become a better investor is by getting your hands dirty.  You didn’t learn to ride a bike solely by listening to your parents did you?  No, at some point you had to get on that bike, take the training wheels off and let ‘er rip.  Investing is no different.  Some novices might be interested in the very basics of stock market transactions and others might be interested in managing their risk via derivatives.  In either case, you’ll learn a lot more by doing.  Don’t be afraid to get in the trenches, lose some money and maybe even stay up all night waiting for the opening bell as you worry to no end about a certain position.   You can’t learn in this business without doing.  Practice really does make perfect.

3. “Truth is like the sun. You can shut it out for a time, but it ain’t goin’ away.”

Only YOU are accountable for your decisions

This is a business of accountability.  Whether you’re managing other people’s money or your own.  As the portfolio manager YOU are accountable for your decisions.  Own your mistakes, learn from them and avoid repeating them.  Not accepting accountability is your way of avoiding responsibility for your actions.   How can you ever become a better investor if you avoid taking responsibility for your mistakes and learning from them?

Elvis was a wise man.   Good luck out there .

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