• Matt Morizio

Are you investing to win or investing not to lose?

“Wow, that sounds risky, ” is the typical reaction when I explain our individual stock strategies to people for the first time. Here’s how the conversation goes:

“What makes you different than any other advisor I’ve met?”

“Well, for one, in our growth strategy we invest in 15 individual stocks, not funds, and I’m willing to bet you don’t hear…”

“Woah! (There’s usually an astonished interruption) That seems really risky.”

“What makes you say that?”

“Because I’ve never heard of that. Isn’t that day trading? Are you guys day traders? I’m pretty conservative and don’t know about stock picking.”

“We aren’t day traders or market timers. All of our growth investment decisions are made with a long term mindset, 3-5+ years. How is your money currently invested?”

“I think I’m in a few mutual funds, or index funds, or some type of funds, but if I’m being honest, the statements are so confusing I rarely look at them.”

“Do you know what funds you are invested in?”

“Well, not the exact ones but I could check. I know my money is diversified across multiple funds, some growth, some conservative, and I meet with my advisor once or twice a year to discuss how they are performing.”

“Got it. That’s a very typical portfolio I see. May I ask, what is it about your funds that are safer than the stocks we invest in?”

“Well, my funds have a lot of companies in them, so my risk is spread out. Investing in a handful of stocks seems way riskier.”

“I understand what you’re saying. You’re right, if any of the 600ish companies you own within those funds does very poorly, you won’t feel that too much….but it works the other way, too. If one of those companies doubles or triples in value, you won’t feel that gain very much, either. Have you thought about that?”

“Sure, that makes sense, but I’m not convinced a small handful of stocks is the way to go.”

“It may or may not be for you. What is your end goal, and when do you anticipate needing the money?”

“I want it to grow! And I have no plans to use that money for at least a decade.”

Which leads me to the title of this blog, and my biggest stumbling block with most portfolios today:

Most people want to invest to win but their portfolios reflect someone who is invested not to lose.

If you are invested in a bunch of funds and those funds are looked at 2-4 times a year, I hate to break it to you, but you aren’t investing to win. You’re investing not to lose.

You might want to win, but your investments don’t reflect it.

Think of it in the context of personal health. You can eat right and exercise so you don’t get fat, or you can eat right and exercise so you look like Michelangelo himself chiseled you out of stone.

Let’s say you want to look like a Roman god. You join your friends (none of them look like a Roman god by the way) at their “body pump” class three days a week, and you all try the Paleo diet together.

But you love your ice cream ritual at night with your spouse, and the mornings are always chaotic so you still eat your granola cereal to start your day. And the weekends are, well, the weekend. Rules don’t apply on the weekend.

You get my point. Even though you want to get ripped, your diet and exercise reflect someone who is trying not to get fat. To get ripped, you have to do what most others aren’t willing to do.

And the same is true with your investments.

If you’re invested like everyone else, you should expect similar results to everyone else. If you want different results, you need to do something different.

Here is my final thought on this - investing to win isn’t for everyone, and that’s ok. That’s why I don’t work with 100% of the people I meet. We aren’t the right fit for everyone.

But think for a moment about all the ultra-wealthy people you know, read about, or have heard of: Warren Buffet, Bill Gates, Jeff Bezos, Mark Zuckerberg, Grant Cardone, Ed Mylett, the sharks on Shark Tank, Ray Dalio, Elon Musk, Carl Icahn and on and on….

Now tell me which one of them made all their money by investing in a well balanced mix of mutual funds and ETF’s, both domestic and international, being sure to diversify across multiple asset classes to mitigate risk.

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Investment advice offered through Beck Bode, LLC, a fee-only Registered Investment Advisor in the Greater Boston area.