I love to travel, but with two young children (5 and 2), I don’t get to do much of it.  When I do, one of my favorite parts is chatting up the cabbies from the local town.

This week, I am traveling to Las Vegas for the Money Show.  I arrived late last night and my cab ride did not disappoint.

“Buy the Baht,” he said when he learned I was here for a financial trade show.

“What in the world are you talking about?” was my reply.

Ah, it turns out my ride for the night, was a recovering day trader who apparently likes to still dip his toes in the water.  More importantly, he enjoyed sharing his wisdom and war stories of being tied to a computer trading the market without much to show for it.

I humored him by listening to his tale, but I did not get much from his logic for making the trade.  What I did garner from the conversation was the realization that my cabbie was providing me with an important lesson regarding investing.

When the Cabbie Says Buy...

When the cabbie says buy, it's time to sell, and vice versa!

Generally speaking a cabbie is a cabbie for a reason.  Understanding markets, valuation, economic analysis and everything else that it takes for successful investing requires a certain background that does not generally lead to schlepping travelers from one destination to another.

Instead, the cabbie is the central repository for an entire community.  They interact with a large portion of the population, and in a way, they have their fingers on the pulse of what is happening in the world.

From an investing standpoint, one way to view the cabbie (to all of you cabbies out there, I do not mean this in a derogatory way) is that they are the “chief sheep.”  They hear ideas from passengers, usually the hot stock tips, and in an effort to change their lot in life chase the trend.

Taking this observation to my ride last night, I am struck by the applicability of this little rule of thumb. In this case, the cabbie is suggesting...