Adept or Overconfident

That’s my cat, Scrooge, back in 2012. That’s her as a kitten going head-to-head with a deer. I think she always thought she was a lion and could take down that deer. What an overconfident gal. I’m glad the deer didn’t get her. She died last year. I’m sure she’s a lion now. Wherever she is.

There are all kinds of DIY investors. There are those who dedicate their lives to technical analysis (i.e., witchcraft and wizardry), convinced it’ll make them rich. There are those who never shut up about their winning trades publicly, while quietly eating huge losses on stocks, or, God help them, options. And there are those who believe they’ve mastered the market by “always buying the right stocks at the right time,” whatever that means, but then still spend most of their time dumping on professional advisors.

I think these kinds of DIYers would be better off working with and paying the professionals they dump on. But because they’re overconfident, I know they never will. Overconfidence bias is a terrible thing.

But there’s another, not overconfident group of DIYers. They’re ones who buy an index fund, keep buying it no matter what, and have a plan in place for drawing from it in retirement. They’re the adept ones because they know there are things they know they don’t know.

I quite often meet these kinds of DIYers because they’re humble enough to want to a third party to look at what they’re doing. They tend to be excellent investment managers but sometimes need help with the finer details of tax planning or the minutiae of forecasting future cash flows or the potential issues in their estate plan. And I’m happy to help them.

Sometimes they even become clients. But most of them don’t. Either way, I’m happy showing them what’s missing or what needs adjusting in their plan. Then I wish them all the best. If they don’t become clients, they usually thank me by donating to a cat charity or giving me a nice bottle of wine.

These are the good DIYers. They’re the adept ones. They’re the humble ones. They’re the ones who get it. They aren’t at all like the overconfident ones because the overconfident ones wouldn’t even dare meeting with someone like me. And that’s fine.

Maybe technical analysis will lead them to riches, maybe one day their loud wins will dwarf their quiet losses, and maybe one day they’ll have mastered the market to the extent they don’t even need to dump on professionals. But I’m not going to hold my breath.