Ruthless simplicity is where your power and edge will be found. We’ve been taught to think in ways that align our money with company's and business models:
- The big-box adviser (read: any adviser that is a long-only manager, has you in two or more mutual funds and/or doesn’t believe that you should ever be out of the market).
- The ‘pick-of-the-month’ newsletter industry. A place where you are pounded daily [sometimes hourly] with stock-picks touting the next Facebook of China that will provide you a 10,000% return. Sell their cleverness and buy simplicity.
We believe everything you need to know to avoid large losses and participate in all major up-trends can be done by asking two questions:
Frequently Asked Questions
1. Do I have to spend hours in front of the computer each day or week (or month) managing my positions?
No. More effort almost always leads to bad returns. And if you align your money properly the market does the work for you.
2. Do your two questions mean we will be trading?
No, 78% of the time the stock market is in a stable uptrend and that means there are quarters and years where your money is being taken on a stable, consistent safe acceleration higher. Its avoiding the 22% that is a key part to have stability in your investments.
3. Is your approach passive or active?
Neither or both. My approach is passive at times (no need to change anything) but when the market changes you have to be ready to shift with the market regardless of age or self described risk tolerance.
4. Why don’t you believe in diversification?
Mainly because it stopped working in 1996. With the advent of the internet markets, different sized stocks and sectors have never been more correlated as they are today. When the market falls 20% to 50% all equities are going with it.