Episode description
Well, it’s getting real friends. Like the math said it would.
Now, what do we do with it.
First, we don’t panic. You were prepared , or you weren’t. If you were prepared, you’re sanguine. You’re accepting of the circumstances. If you weren’t prepared, that’s ok. Let’s talk about how you can approach this.
Second, turn off financial media. They’re only going to stoke emotions, resulting in things like (but not limited to) getting submerged in the FUD (fear, uncertainty, and doubt), the FOMO (fear of missing out), the YOLO (you only live once) and might be thinking you’re buying the bottom, Anchoring (which is gluing yourself to a price of something in our mind, instead of letting it go), and a host of other behaviors that are driven by emotions and can result in catastrophe.
We’re here to help you avoid that.
Let’s talk about math for a minute, and then we’ll talk about portfolio management, or investment management if you need clarification.
Math, in markets, is unfeeling.
It doesn't care about your wallet, your sales program, or your need to be right.
It doesn't care about your ego, or your fear.
It doesn't care about matching your analysis of averages, or a "time in the market" chart, or your overconfidence in "timing' the market.
It doesn't care how many analysts pound away at spreadsheets to try and produce an outcome, or match an expectation with a model.
It just does its thing, and represents a set of conditions with a set of prices at any given time.
🧩 It does have probabilities, though!
👉🏼 Math states what "is". And what "is" right now, from a macro perspective, is that we are in <insert favorite series of expletives>.
Things are going to work out after what we're going through.
We agree that most people make poor portfolio managers of their own money. Because they usually:
🔹 Buy or sell emotionally
🔹 Don't have specific risk rules in place
🔹 Or they have risk rules but deviate from them, based on emotion
🔹 Don't habe a process
🔹 Don't know how to properly diversify (different types of stocks doesn't equal diversification)
🔹 Don't understand correlation
🔹 Don't know how to measure risk
🔹 Don't have an idea of min/max position sizing
🔹 Don't have sufficient research
🔹 Don't understand macro and how it moves sectors and affects outcomes
🔹 Are missing at least one or more of the following: Knowledge/Skills, Access, Time, Inclination
For most people, IF they are not under active investment management/advisement, we agree that it's best to:
✅ Spend less than you earn
✅ Save what you can
✅ Set up a plan
Invest what you can
✅ Keep buying through all conditions
✅ Stay invested and let compounding work over time, using strategic investment allocations
✅ Then focus on maxing out your own skills to produce more income. It will benefit you more than the time you spend trying to research how to manage your portfolios.
This is not time to be an investing hero.
Titan hedge fund managers get burned.
You will, too.
🫣 Humility is the #1 trait of a good portfolio manager. And good managers will tell you about their mistakes, their losses. They don't hide those from you.
👺 Ego, pride, deception, ambition, and self-serving motives lead people to proclaim all of their winners and their prowess. But, it's bunk. Don't believe the hype.
How you are invested is important. How you determine your course for the coming years has never been more important.
If you have questions, do not delay. Seek guidance.
The "macro" ship is taking on water. We will find ourselves in a position to take advantage of market opportunities. For now, decide how much cash you want on hand.