Wednesday, Oct. 20th
I’m going to borrow an email from a mentor and fellow advisor, Carl Richards. I don’t think I could relay his point in a better way, so here’s an excerpt from him. I’ll give you my thoughts afterwards:
What I’m about to tell you is going to sound crazy… but bear with me because it’s definitely true.
Ready? Here it is…
We get to decide what we focus on.
Hold on… let me repeat that in case you missed it:
We. Get. To. Decide. What. We. Focus. On.
When it comes to investing, that means you have a choice.
1- You can tune in to the financial pornography network, go through endless cycles of “buy buy, sell sell,” obsess over the latest IPO, and deal with the apocalypse du jour while cycling through all the emotions that come with it.
2- You can focus on what actually matters when it comes to investing. And that’s time. A very long time: decades.
If you choose to focus on days, you are signing up to make yourself miserable. And for no good reason. There’s actually no benefit to that. I can handle pain that leads to gain, but this is just pain that leads to more pain.
On the other hand, when it comes to investing, we actually get rewarded for ignoring the daily noise. As Morgan Housel says in his book The Psychology of Money, “Warren Buffett is a phenomenal investor. But you miss a key point if you attach all of his success to investing acumen… His skill is investing, but his secret is time.”
And you know what Buffett said?
“Benign neglect, bordering on sloth, remains the hallmark of our investment process.”
Does that sound like the type of guy who is constantly refreshing CNBC?
Remember, you actually have a choice. Days or decades. What’s it going to be?
Pretty wise words from Carl, and I see it every day! The world and the media have trained us to pay attention to things that do not matter. I love what he says about the latest IPO! We’ve all seen how easy it can be to get caught up in the frenzy of the what ifs. Can it work out and you become filthy rich overnight? I guess it could, but it’s not very likely. We know this, and yet we still are tempted by the ease of it all.
And then he mentions the apocalypse du-jour. This one hits home with me and I hope it hits home with you as well. There will always be something going on in the world that could keep you from investing. Always.
I clipped an image from an article I found that lists 32 things that happened in the world that were excuses for folks to bail from the markets. This is just since 1989! You can do your own search and find dozens of similar resources. The takeaway…when the current crisis is over, there will be another one to take its’ place.
So you have a choice, do you focus on the days, or do you focus on the decades when it comes to investing? The emotional investor may enjoy a short term win, but he’ll lose out in the long run every time.
This is why we don’t day trade or use speculative strategies for our clients. We never have and we never will.
Like Carl said, you get to choose what to focus on: days or decades. One of these will allow you to spend more time enjoying your retirement and less time worrying about what happened in the market today.
Have a great week and thanks for the trust you’ve placed in our firm!