Staying the Course

Some tips I learned on navigating difficult markets over the years

I thought this week would be a good time to talk about some investing lessons I have learned over the years. I have certainly made the mistake many times of capitulating at the bottom of a market, selling and then not trusting the next rally and missing out on the market recovery. Even if you are a passive investor buying index funds or if you have farmed out your investments to a portfolio manager, you still have an obligation to know enough about what’s going on to properly manage your money.

Here are some of the things I have learned over the years:

• Have a portfolio asset allocation strategy - I have found that having an overall portfolio strategy helps keep you grounded, more focused and less inclined to make small or frequent changes to your investments that could potentially turn into losses - a monthly portfolio check-in (similar to what I publish here in this substack) with a simple spreadsheet is all that’s needed

• Don’t react to headline news - This is really important, as fear and panic can set in quickly, especially with recent mainstream media news flow; in that regard, it’s really important to focus on what you can control, not worry about things you can’t control and use critical thinking at all times

• Financial education and understanding the macro investing environment are essential and ongoing - There are so many free resources today, including podcasts, substack blogs, etc. that you can use to help improve your financial education and understanding the macro environment (check out some of my recommended substacks here). I believe studying the markets and the macro environment are absolutely essential to becoming a better investor, even if you think you have mastered a particular area.

• Investing moves should be well planned and deliberate; start small and scale up - I think it’s important to plan your moves well in advance, using your portfolio strategy as an anchor, do plenty of research and start small / then scale up - if you make a wrong move, which happens to the best investors, it won’t do that much damage to your portfolio, especially if you are also diversified

• Diversify - It’s very difficult to be right all the time and diversification helps make sure that you can have a portion of your portfolio focused on wealth preservation and a portion of your portfolio focused on growing your wealth, while allowing you to to be wrong about something and not wipe out your whole portfolio in the process; the older you are the more you tend to skew toward wealth preservation

• Try to buy assets that are cheap and sell assets that are expensive (George Gammon rule) - This is a very simple rule and applies to trading and also to what might otherwise be considered long term investing when we experience valuation “bubble markets,” which seems to happen more and more in recent years with insane central bank monetary policies

• Wealth preservation: Cash, Bitcoin, Gold and Silver - these are my preferred assets for wealth preservation (physical self-custody where possible); in normal market environments, I try to keep cash balances low but in today’s bear market environment, higher cash balances give you more optionality and ability to buy when prices are low

• Wealth growth: stocks, real estate, private companies are what I favor

• Sometimes the best thing to do is nothing - if you are positioned well for the current market conditions, sometimes it pays to just be patient, watch and wait

• Observe and read broadly - at some level everything is connected, so reading a wide variety of news helps you develop a broader view of what’s happening vs only focusing on market news and of course getting perspectives from different investors through podcasts and blogs has been very helpful for me in developing my own market perspective and investing style

Not financial or legal advice, for entertainment only, do your own homework.  I hope you find this post useful as you chart your personal financial course and Build a Financial Fortress in 2022.  To see all my books on investing and leadership, click here.  

Always remember: freedom, health and positivity!  

Please also check out my Building a Financial Fortress Podcast on YouTube here and on all your favorite streaming platforms.