20/20 Money: See the Markets Clearly and Invest Better Than the Pros

Parting Thoughts

Renowned businessman and statistician Roger W. Babson published the first edition of Business Barometers Used in the Management of Business and Investment of Money: A Textbook on the Applied Economics of Merchants, Bankers, and Investors in 1909. (What a title!)

The book had many editions throughout his life, and in the version updated December 1929 (shortly after the market crash), Babson wrote a new preface. He begins with the disclaimer, "Fundamental Principles which readers of this book should always keep in mind." Babson contends anyone can successfully forecast the stock market if they have two things:

1. "One must develop self-control, both to refrain from attempting to profit by the monthly fluctuations, which 95 percent of the people endeavor to follow, and to act quickly and take advantage of the major movements, which 95 percent of the people fail to profit by, either because they are infatuated with prosperity or scared by panic or depression."

2. "One must develop patience, and remember that it takes years to build up a fortune in this way, and that it is an especially slow process at first ...."

Those two small quotes tell the tale of 20/20 Money perfectly. It is amazing and appropriate the lessons of this book were known so long ago—merely in different words. Absent the fancy lingo and theories in this book, Babson understood intuitively the power of self-control and utilizing the right way to view the world—which too often is contrary to how "95 percent of ...