As Charlie Munger liked to say, “Invert, always invert.”
Here are some things about investing that I don’t believe:
I don’t believe there is a sole way to invest. Everyone has a different emotional make-up and lesser version of themself. Plus, experiences and circumstances can shape your attitudes towards risk and return.
There are a lot of strategies that can work. You just have to find the one that works for you and then stick with it regardless of what everyone else is doing.
Easier said than done.
I don’t believe anyone has the ability to predict what’s going to happen next with regularity. Hedge fund managers can’t do it. Economists can’t do it. Investment strategists can’t do it. I can’t do it. You can’t do it.
And that’s OK. Everyone’s bad at predicting the future because predicting the future is hard.
I do believe you can prepare for a wide range of outcomes without predicting what those outcomes will be in advance.
I don’t believe politics should ever play a role in your investment decisions. Partisan politics feels like they are infused in everything these days. It’s impossible to avoid.1
Presidents get too much credit when the economy is strong and too much blame when the economy stumbles. Politicians don’t control the economy, stock market, gas prices or grocery prices.
Here are the total returns from the past four presidential election dates:
Election day 2008 +675% (14% annualized) Election day 2012 +400% (14% annualized) Election day 2016 +207% (15% annualized) Election day 2020 +81% (16% annualized)
You can believe what you want to believe about politics but those beliefs have no place in your portfolio.
I don’t believe investing is ever easy. You can make it simpler but investing is hard. There’s no shame in admitting that.
I don’t believe there is a