“Off The Wall” Blog
Unique, straight-forward, unfiltered opinion on topics of concern for individuals with newfound wealth.
Predictions are worthless, so instead, let’s review some investing lessons from 2020:
1. Don’t fight the Fed OR the government – the turnaround from March lows was mainly a function of Fed intervention and fiscal policy weight.
2. Have liquidity – you never want to sell equities to raise cash for personal liquidity during a sell-off. Never allow a lack of liquidity to financially break you.
3. Have a cash cushion – this is an associated lesson to having liquidity. A cash cushion is all about raising the probability of success across ALL LEVELS of market risk…therefore decreasing your chances of financial disaster during a crisis.
4. Not losing control of your behavior and emotions – this can lead to financial disaster. You are one of ~7.5 billion people on this planet. You should not be waking up every day trying to outsmart everyone else. Respectfully, I assure you that the probability of you having an investing edge or unique insight is around 01T power.
5. Focus on compounding – compounding good returns is a great long-term strategy – this is a 2020 lesson and a multi-decade lesson. Don’t overthink strategies. Patience and discipline are critical.
(With permission of Carl Richards @behaviorgap – thank you.)
6. Be optimistic – confidence about the future is an essential component to the success of your plan. Here’s a chart of how the economy performed over the past 170 years.
(**Thanks to Morgan Housel, a local Alexandria VA neighbor, for the above from The Psychology of Money. @morganhousel)
7. Be distrustful – your plan is unique to you, so eschew the noise, solutions, products, and ideas proffered by other people not associated with your plan, goals, and timeline. They may not mean any harm, but they probably define success differently than you.
8. Use models based on rules, not your gut – things are rarely black and white. Investing, like war, is a perpetual battle between offense and defense. Employ a system to make rational choices and remember to never confuse “buy and hold” with “committed to being invested.”
9. Remember that shit happens – maintain flexibility in your plan, perspectives, and thinking. When things go wrong, look at your plan and assess the real impact on your future. (See #2 and #3 again). As Steve Jobs once said, “You can only connect the dots looking backward.”
10. Have real goals – investing without them is like getting in your car just to drive somewhere. Don’t have any goals? Try this to start: “I want to wake up every day and be able to do whatever I’d like and not have to do anything I don’t want to.” Refine your plan and investment strategy from there.
Planning and investing can be easy to learn but challenging to master. Pay attention to the investing lessons learned in 2020 and apply them to be better in 2021.
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Keep looking forward.
IMPORTANT DISCLOSURE INFORMATION
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Monument Capital Management, LLC [“Monument”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Monument.
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Please Note: Monument does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Monument’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.
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David B. Armstrong, CFA
President & Co-Founder
Dave got into the industry when he discovered his passion for finance in his mid-20’s. He’s a combat veteran and served as an officer in the United States Marines Corps on both active duty and in the reserves, retiring at the rank of Lieutenant Colonel. While serving on active duty, Dave was unable to spend money on deployments, so he became a self-taught investor. Along with a few bucks cash as a bouncer, his investing performance grew to be good....
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