2) Complain that dollars are a fiat currency and buy gold, because gold is a much older and therefore magically better fiat currency, which cannot possibly ever be a bad value.

3) Try to make a quick buck. Investing in solid assets and allowing them to grow naturally is boring.

4) Make sure the government can tax everything twice. Things like IRAs and 401ks, which allow you to be taxed either at the start or at the end but not both, are for tax-dodging capitalist criminal pig-dogs, and you don’t want to be a TDCCP-D.

5) If Uncle Lenny proposes a business deal, jump on it! It’s not often that you can buy into a business as stable and profitable as the one Uncle Lenny is going to build!

Don’t hold onto stocks in an attempt to regain losses, but also don’t sell it if you still think its undervalued!

Don’t trade!

I agree that constantly changing your asset allocation is a bad idea.

But, Rob makes some good points about passive investing. Your needs and the overall economy will change over time. You may need to adjust to meet them. Also, our allocations will sometimes get out of balance as some parts of the market do better or worse than others. Even if the overall allocations don’t change, you will need to bring them back into balance from time to time.

If I had to add one item to your list, it would be
this. Panic every time the market takes a downturn.

The only things I’d add would be:
1. Ignore the expenses you’re paying, and
2. Ignore the tax efficiency (or lack thereof) of any funds you own in taxable accounts.

I strongly agree with the first statement — that setting your stock allocation properly is critical. I strongly disagree with the second statement — that not adjusting your stock allocation as needed to keep your risk level roughly constant makes sense.

The idea of investing passively (not changing your stock allocation in response to changes in the valuation level of stocks) is an idea that perhaps helps The Stock-Selling Industry in the short term but that helps not one of the middle-class investors who place their confidence in the people who promoting this “idea.” Passive Investing has been tried four times in U.S. history. It has resulted in huge financial losses for all who followed it and an economic crisis for the entire country on each of those four occasions.

When you hear an investing “expert” advocate Passive Investing, you should ask yourself — If a used car salesman told me not to look at the price of a car I was thinking of buying, would I go along? If we take into consideration the price of cars and comic books and bananas, why should we fail to do the same when buying stocks?

Investing passively is the single biggest mistake that any investor can make. Yes, asset allocation matters. It matters enough to make it worth taking the time to look at the price at which stocks are selling before putting money on the table.

Rob