“An Expensive Haircut”…
by the barefoot investor for The Herald Sun

THIS week I spoke to thousands of first-time investors who had each invested $50,000 three weeks ago and suddenly seen much of their money disappear.

Luckily it was only students competing in the ASX’s School Share Market Game, which in current conditions is kind of like doing work experience at a hairdresser and having Donald Trump walk in for a trim.

Little Johnny’s first foray into finance causes him to lose his imaginary shirt. Bring back the Playstation, this game sucks! Try doing it with real money.

Wait, us old folks did.

Apparently $100 billion of our superannuation has been sucked down the toilet. Now that’s an expensive haircut.

So what lessons can we learn from what former Fed boss Alan Greenspan has called a “once-in-a-century financial crisis”? Here’s my top five.

Lesson 1: There is such a thing as too much of a good thing.
Lesson 2: There’s no such thing as a free lunch.
Lesson 3: Don’t buy things you can’t afford
Lesson 4: Don’t invest in things you don’t understand.
Lesson 5: Do your homework

So that’s my five tips. But the thing that the suffering students playing the ASX Share Market Game and the rest of us need to understand is that once Wall Street is cleaned out, things will start to move again, although not until we’ve fully paid for the sins of our past.

I explained to the students that the news headlines they’re reading are important for one critical reason – the domino effect.

Hopefully, by the time these kids are handed the financial keys to the country, they’ll have learnt a valuable lesson. Here’s hoping.

Tread your own path!
read on

these lessons not only apply to students playing a game do they?
or to just investment per se either…
every entrepreneurial mother promotes these as well