Resetting Expectations

Today's Newsletter:

• My Latest

• Hogs Get Slaughtered

• Resetting Expectations

• A Money Question

My Latest

What if I told you your investment returns correlate most with your spending?

Well, at the root of it, it is true, and I share why in my latest:

• Why your spending is the foundation

• How to think about building your portfolio

• The difference between your ability to take risks and your desire to

You can check it out here ⬇️⬇️⬇️

P.S. I have 358 videos on YouTube, and I like to think a few might be valuable. So, here is my ask ~ If you find a video there you like, share it with someone it can help.

Hogs Get Slaughtered

One thing is certain in life.

The older I get, the more I realize:

• How little I know

• How much those further down the path know

I find myself nearly every week having an aha moment, thinking, “Oh, that is why they did it that way.”

Usually, it revolves around something that I was sure was wrong at the time, and now I am sure the only thing wrong was my thinking.

Well, cue the music, here is another one.

Warren Buffett has this great line, “Pigs get fat and hogs get slaughtered.”

In short, it means don’t get greedy and be thankful to take what the market gives you.

Well, let me take you back to 2015.

• I am seven years into investing.

• I am averaging double-digit returns.

• I find myself wanting more and thinking there is a silver bullet.

Without getting us too far off track, the next year went a bit like this.

I took more risk, with very little research, and learned a valuable (and expensive) lesson.

Pigs get fat, but hogs get slaughtered.

Well today, I am going to talk about just that and how you can avoid it (especially in today’s market).

Let’s dive in…

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Resetting Expectations

At Moment, we are just finishing up our fall client meetings.

Meeting after meeting, I have the great joy of delivering clients the positive news.

“Your portfolio has outperformed our planning expectations.”

When the market cooperates, it is fun for everyone.

After all, who doesn’t like seeing more money in their account?

Yet with that comes the realization that expectations can quickly separate from reality.

Here is what I mean:

• Expectation - Well, maybe this will just continue forever.

  • Reality - There is a bear market (20% decline) every 3.5 - 4 years.

• Expectation - I should be taking on more risk.

  • Reality - Your portfolio should align with your ability to handle the downs.

• Expectation - The market is doing great, but Bitcoin, Gold, etc.. are up 2-5x that.

  • Reality - Diversification means you will always have assets you wish you had more of.

You see where I am going here?

The minute we get a little of something good, we quickly want more.

It reminds me of the first question I ask myself when I see a private investment deck.

“What is the downside?”

I am still yet to see a deck that doesn’t do an outstanding job laying out the bull case.

The 20%+ IRR, the shortened liquidity window, and the “rare” opportunity to invest.

Yet just like any investment, we should always be keenly aware of the bear case.

Now, to be clear, I am not a doom and gloom guy (or investor).

In fact, quite the opposite. I believe in the power of the markets.

Yet to be a great investor (and achieve a great return), you must focus as much (or more) on your losers than your winners.

Consider these stats from a memo legendary investor Howard Marks wrote titled: “Fewer Losers, or More Winners?”

Pension fund manager, David VanBenschoten, achieved the following returns:

• Never ranked in the top 27th percentile

• Never ranked in the bottom 47th percentile

• After 14 years, his results ranked in the 4th percentile

Wait what? Yeah, I know, crazy.

He was never in the top 25% yearly, but finished in the top 5% after 14 years.

That my friends, is the power of protecting your downside.

So what can we learn from this and apply to our own portfolios?

We should be as focused on the downside case and the upside case.

Remember, your goal as an investor (not a speculator) is to achieve the highest rate of return over the longest time period possible.

To do that, you'd better protect your blindside (football reference for my NFL fans).

To do that, you need to:

• Own a diversified portfolio

• Never lose track of your desired life outcome

• Build a portfolio you can stick with in a bear market

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So remember, the next time you think you should be earning more…

Warren is right, hogs get slaughtered (eventually).

For us, we need to ensure our portfolio has a keen awareness of the downside (especially when things are good)

Until next time my friends!

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A Money Question

What is the rate of return you need to achieve your desired outcome?

Look, I get it, we all want to earn the highest rate of return.

Yet consider one person who earns 15% but never reaches their life goals, and one who earns 8% and reaches every life goal.

Who had the better outcome?

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3 Ways I Can Help You

💰 Schedule an introductory call with Moment. We help athletes, entrepreneurs, and key employees build and protect wealth.

📹 Check out my YouTube channel. A safe place to get smarter with your money.

📷 Interact with me on Instagram. I provide bite-sized daily content to level up your money game.

Moment Private Wealth, LLC is a Registered Investment Advisor, located in the State of Missouri. Moment Private Wealth provides investment advisory and related services for clients nationally. Moment Private Wealth will maintain all applicable registrations and licenses as required by the various states in which Moment Private Wealth conducts business, as applicable. Moment Private Wealth renders individualized responses to persons in a particular state only after complying with all regulatory requirements, or under an applicable state exemption or exclusion. Nothing in this content is intended to be, and you should not consider anything in this content to be, investment, accounting, tax, or legal advice.