I had one of those ‘never assume anything’ moments this past week.  I was discussing the basics of investing with a friend.  He’s a bright guy, so I assumed we were on the same page.  Wrong.  I assumed he had a clear understanding of his financial goals.  Wrong.  I realized in talking with him that his financial plan consisted entirely of buying something that went up.  His understanding of making money was to buy something low and sell it high.  To him, a share of stock is a lottery ticket, no more and no less.  He asked if I was in favor of owning mutual funds.  I told him he did not want to own mutual funds if he wanted to make money, as long as his notion of making money consisted only of buying low and selling high.  I then explained to him that there are three ways to make money in the stock market.  He can buy low and sell high.  He can buy high and sell higher.  Or he can buy and hold.  Only one of these ways has been proven to work consistently over time.  I then explained the concept of buying, holding and reinvesting.  He was not opposed to this method of investing.  It had just never occurred to him.  Yikes!!  I have to ask myself why his understanding is so limited and how many folks like him are out there.  Are the media to blame?  Does all of America have a crapshoot mentality?  Have we failed to reach the masses?  Without proper education, my friend is going to be a headache to some Financial Advisor somewhere, assuming he has the common sense to hire a Financial Advisor.  And, yes, I did steer him in that direction.  My friend proved to me that we can never go wrong revisiting and stressing the basics.  The burden is on the advisor to do that every time, the client’s pedigree not withstanding.