I have been playing squash for a COVID shortened year - my official match record sits at a cool 0-3. My own poor scores I attribute to my inability to play a backhand volley. I have no match play because the weekly round-robin starts around 6:30 PM on Friday night, about 3 hours after the beers are cracking open.
I have a 64-year-old coach who I train with every Wednesday morning, and while he can’t move as well as he once did, he can put the ball on the exact spot he wants it to be. It’s a winning formula, and he makes sure to gently remind me that its success isn’t simply because he’s passing all his by. Hitting away from your opponent is far more effective than just hitting hard. Concentrate in what makes sense and stay away from what are seen as the formulas for success. Sounds like a recipe for reaching your investing objectives.
Most are familiar with only the last line of Maslow’s famous quote. But the full passage from his seminal work The Psychology of Science is more illuminating. "I recall once seeing an elaborate, intricate automatic car-washing machine which did a marvellous job of cleaning cars. But all it was good for was that; for whatever else fell into its grip, even life, it was just like an automobile to be cleaned. I guess it’s a trait of human nature that, all too often, if the only instrument you possess is a hammer, every problem begins to look like a nail.”
I’ve been ruminating on that quote a lot lately. The financial services business thrives on products.
Have an investing problem? Navellier, try this new, improved ETF that tracks a back-tested, newly created index. This investment would have made you a Rockefeller, had you but picked the mega-trend of climate change ere it dawned in the ice-age.
Want to achieve your goals? You want some kind of trading platform that specialises in Malaysian small caps who are willing to give you free trades for an usurious FX exchange rate.
As an investor – in a company sellng products in order to attempt to produce profits – well that doesn’t exactly give me the blue creeps. As an advocate for investors, I believe most of these products should be avoided.
Shani and I will publish the 100th episode of Investing Compass on Sunday. We reflected for a little while on the current state of investing and our thinking on what it takes to be an investor. And guess what? Not one product came up. As investors, you should not care what products. You ought to care about results.
Many investors don’t focus on, or even know, the endpoint they’re aiming to reach. Too many seem to have internalised the industry view that the solution to every problem is a product. Maybe that’s just great marketing. Maybe that happens in part because it’s an industry that has a way of making investing seem both overly complicated and too formulaic at the same time. Perhaps that’s just capitalism, in a nutshell. Any or all of those make sense as explanations. But I believe that it is even more than that. The reality is: I believe most investors are typically debating which broker to use because they don’t want to face the truth, which is, they don’t know what they are doing.
To clarify: “Getting rich” or “having the most money possible” are not goals. And I don’t mean that in a judgmental way. I mention that because what you suggest does not work. The concept of ‘getting rich’ or ‘having as much money as possible’ is a way of internalizing the investing counterpart of Maslow’s hammer. But in case you meant to ‘get rich’, then clearly the best performing product is the one you should always be in. In that sense, it’s an ideal way to go, for an industry that prefers that you trade as often as you feel like and that you let yourself be seduced by the seductive story around the latest newly hatched ETF. Is the complex automatic washer designed to do your investing for you?
And with all humility but also confidence, I submit the following. Identify your investing objectives and hard-wire them as the only thing you think about when investing. Be incredulous of investment products or platforms. Stay away from the kryptonite of successful investing, and don’t chase returns. Don’t fall for the siren’s song of investment marketing.
Listen to our podcast on Sunday to hear if you agree with what Shani and I believe makes a great investor. Drop me a line with your own stories of achieving goals or just to tell me to stop using so many analogies. Offer to be No. 4 of those who can beat me in squash at a decent social hour.
