🏌️Master’s Week X Money 🏌️

Today's Newsletter:

• Quote From Bruce Crampton

• Peformance Tug of War

• Investing Frameworks

• A Money Question

Quote

“Golf is a compromise between what your ego wants you to do, what your experience tells you to do, and what your nerves let you do.” - Bruce Crampton

A great golf shot looks as easy as a great 10-year performance report. Yet standing over a golf ball and executing that shot is a far harder feat than it might seem. The same can be said for successful long-term investing.

Performance Tug of War

I remember having a passionate discussion about the difficulties of golf versus baseball. I thought, “How on Earth can one compare the difficulties of hitting a ball moving 90+ MPH (baseball) to one standing still (golf)?” Yet, as I stand here 15 years removed from that conversation, I can assure you each comes with its own set of challenges.

I had the same ego-driven thought when my first financial advisor showed me a side-by-side of two 10-year performance charts. On one side of the chart it showed a fund investing in growth assets (stocks) and on the other side it showed a fund investing in safe assets (bonds). The stock performance far outweighed the bond performance. My ego immediately thought, “Why on Earth would I ever put money in those safe assets if I can make a multiple of that with the growth assets?”

Just like golf is a compromise between ego, experience, and nerves; investing is much the same. My ego used to think the return on that 10-year performance chart was the only factor. My experience or lack thereof didn’t account for what it takes to execute on that. My nerves didn’t account for the emotional swings that inevitably happen over a decade of investing.

So, what should be considered in the tug-of-war that is long-term investing?

Investing Frameworks

1. Start With The End In Mind

Before making any investment, we must first understand what we are trying to accomplish. A 10-year performance chart is great but it doesn’t provide financial flexibility, create memories, or leave a legacy. It is just a number on a page. Instead of starting with a return, start with the goals you are trying to accomplish. Then you can start the process of mapping out what it would take to achieve those goals.

2. The Waves Are Real

Remember how my first financial advisor showed me that chart of growth assets and safety assets? While all I could see was the potential for higher returns, the reality was far more complex. The reality is to achieve those bigger returns it takes swimming in the deep end of the wave pool. The waves in the deep end are bigger, more unpredictable, and unrelenting. Investing for growth is the same way. The waves are real. It does not feel good seeing your portfolio down but how you react will determine whether you achieve your desired performance.

3. Check Your Ego

I define ego as the gap between the reality of one’s ability and what one’s brain thinks it is. Go to your iPhone, open up the “stocks” application, search for Tesla stock, and zoom out 10 years. That is some serious performance. Ego quickly says, “I want that.” The reality is finding the next Tesla, executing on it, and sticking with it is a statistical anomaly. Instead, focus on knowing and growing your ability to take risks. For me, that has changed over the years. When I first started investing my ability to take risks was minimal as I had no experience. Today, I have increased my ability to take risks. That increase has been a natural progression that has come with self-awareness and experience.

Long-term investing is a constant tug-of-war between ego, experience, and nerves. It is the equivalent of knowing when to “go for it” on the par 5 or to lay up the perfect number. It takes reps, experiences, and often a guide to know when it is “go time” and when it is time to play it safe.

So remember my friends, much like golf looks as easy as that 10-year performance chart. It is a battle of ego, experiences, and nerves.

A Money Question?

What are you trying to accomplish with the money you are investing?

Reaching those goals is far more important than any number on a page.

Work with Jacob

I help families navigating sudden wealth pay less in taxes, coordinate their financial life, and invest for the long run.

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Until Next Time, My Friends

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