Horizon.my

Once more we are reaching the close of another year. While thinking of what to write and since it is Christmas season, it is good that I share on some biblical perspectives of money.

In the Parable of the Shrewd Manager (found in Luke 16 of the Bible), Jesus says:
 
“No servant can serve two masters. Either he will hate the one and love the other, or be devoted to the one and despise the other. You cannot server both God and Money.”

For some of us, the single biggest test in our lives is MONEY. For the sake of money people will do almost everything… lie, cheat, hate, backstab and perhaps more.

I believe that for individual investors, learning to deal with our greed is a key factor to succeed in the stock market.

I have lost money on the stock market before and it was largely because of greed.
 
In hindsight I consider the losses to be ONE OF THE GREATEST BLESSINGS in my life. Stock market players usually tell you how much they make. They keep quiet when they lose. You never hear of the loss.

But if you reflect on the loss, it can be a source for great lessons in your life.

Dig into your wallet now and reach for your largest note. See that it has four corners, right? So remember money has four legs. We humans have two legs…so we cannot run as fast. If we chase after money, it will somehow outrun us.

That was something I picked up from a conference speaker. Simple as it may sound, it also contains a powerful truth.

God clearly teaches us not to be greedy and not to focus our lives around money. See what Jesus has to say:

Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal. But store up treasures for yourselves in heaven, where moth and rust do not destroy and where thieves do not break in and steal. For where your treasure is, there your heart will be also.
The Holy Bible, Mathew 6:19 (NIV)

This teaching goes against the very grain of our human nature. Society today teaches us how to excel in our studies and in our work… so that we can make more money, buy more things and be one up on the other person.

For many the stock market is a way to get rich fast. If you are such a person, you are really setting yourself up for disappointment.

People Make Mistakes

In his book One Up on Wall Street (Page 74), Peter Lynch likens stock market investment to the game of Stud Poker.

“Betting on seven-card stud can provide a very consistent long-term return to people who know how to manage their cards. Four of the cards are dealt face-up, and you can not only see all of your hand but most of your opponents’ hands. After the third or fourth card is dealt, it’s pretty obvious who is likely to win and who is likely to loose, or else it is obvious there is no likely winner. It’s the same on Wall Street. There’s a lot of information in the open hands, if you know where to look for it. By asking some basic questions about companies, you can learn which are likely to grow and prosper … you can never be certain what will happen, but each new occurrence – a jump in earnings, the sale of an unprofitable subsidiary, the expansion into new markets – is like turning up another card. As long as the cards suggest favourable odds of success, you stay in the hand.”

I’ve never really thought of the stock market as a poker game, but the truth is that there is a lot of uncertainty in the market. The more I think of it, the more I realize that you can be the best investment analyst in the world, yet there are just tons of factors that are beyond your control. We are in a game where we need to put smart bets and find grace through divine guidance.

Lynch says that consistent winners accept the fact that “they’ll occasionally be dealt with three aces and bet the limit, only to loose to a hidden royal flush. They accept their fate and go on to the next hand, confident that their basic method will reward them over time. People who succeed in the stock market also accept PERIODIC LOSSES, SETBACKS and UNEXPECTED OCCURRENCES. Calamitous drops do not scare them out of the game.”

Hmmm… so it’s OK to loose money every now and then. Feeling better already?

If like me you are dealt with investment losses from Black October 2008, take heart. You are in a casino where you can tilt the odds in your favour. There’s heaps of free information to help you invest. Make a resolution to learn from your mistakes. Even the best experts make mistakes. Here’s Peter Lynch again:

“If seven out of ten of my stocks perform as expected, then I’m delighted. If six out of ten of my stocks perform as expected, then I’m thankful. Six out of ten is all it takes to produce an enviable record on Wall Street.”

Change Your Focus

Take a break from routine to refocus. Is money the only reason you are in this game? Say you make a lot of money later on, what do you plan to do with it?

Do you know where your treasure is? … because your heart will be there too. The Apostle Peter said this in his writings in 2 Peter 1:

Make every effort to add to your faith goodness;
and to goodness, knowledge;
and to knowledge, self control;
and to self control, perseverance;
and to perseverance, godliness;
and to godliness, brotherly kindness;
and to brotherly kindness, love.

Peter shared close fellowship with Jesus, so you can bet that he knows a thing or two about storing treasures in heaven. And for the people who find great delight in God’s commands, look at what God says:

He will have no fear of bad news;
His heart is steadfast, trusting in the LORD.
Psalm 112:7

I hope you have been blessed by this article which will be my final one for the year. I will continue to share with you over the coming year. May God shower you with His wonderful love and grace. May He be a guiding light in your investments and finances for 2009.

Happy New Year 2009!