My Hundredth Post
One of the reasons I left my previous firm and set up HWM was because Raymond James assured me that I could write about whatever I wanted as often as I wanted right here on this page. A hundred posts later I can say they kept up their end of the bargain.
Most of these posts are written on evenings and weekends. This isn't work. I write about what comes to mind, and I write because I want my thought process available online. If a client, potential client, colleague, or curious DIY investor wants to know where I stand on something, it's probably here (or it will be).
I have to read a lot to be able to write. A lot of that reading is history. It rhymes but it doesn’t repeat. And a lot of it is market commentary. Reading as much as I have has made something obvious: the investment industry takes itself too seriously.
Most people can be DIY investors. It takes the right amount of grit, resolve, humility, and a lot of hard work. I tell people this because I’d rather they know what they’re getting into before signing up with us (or another wealth manager).
Once you take away stock analysis, finance-speak, market predictions, investment management is straightforward: buy a low-cost diversified index fund, keep buying, hold on no matter what. When you’re close to retirement, make sure you have a war chest in place. That’s it.
It sounds simple but you can’t make mistakes. You can’t use 5% of your investments to buy a stock everyone’s talking about. You can’t stop making contributions until the market or the economy calms down. You can’t let a bad year convince you your plan is broken and needs to change.
But the industry preys on your emotions, dressing up their content with seriousness. Every investment management firm puts out weekly research. Some even put out daily research. Add commentary from YouTubers and podcasters and the content never stops. And that content suggests you should buy that stock everyone’s talking about, that you should stop making contributions until the market calms down (or contribute to their product instead), and that the bad year was your fault because you weren’t in the know. If only you had listened to them.
Some industry participants do it better than others. Their message is the same as mine, but they can’t resist taking part in the content game. And most of the content is unimportant. They want to be taken seriously, and there’s no better way to sound serious than by worrying about the future. Never mind that last year’s worries came to nothing. They don’t even learn from their own history.
But if they sound serious enough for long enough, it might lead you to become a new client. Once you sign up they do what we do: get a financial plan in place and get your investments aligned with that plan. Plan first. Investments second. But the content they create suggests you should invest first and plan second. It’s backwards.
I’m an optimist. But I don’t think the industry is going to change. Investors want prophets because they sound serious. They don’t need them.