Skip to main content

The Price Of Admission

Self-driving cars, NFTs, AI, SPACs - what a time to be alive. With so much excitement and promise, investors are jumping in to invest in seemingly world-changing projects. It's a fun time to trade. Endless options, big gains, compelling stories. Even I've been tempted to join the fun. 

The lack of fun is the cost of admission when you choose to index. Speculation is taken off the table. You'll never get rich quick. Volatility will be limited. Never will you double your money overnight. Swings of about 10% is as exciting as it gets and these days are few and far between.

You'll never have amazing stories about how you were able to successfully buy the dip of a EV stock that has since tripled. You'll never be able to brag about buying Amazon at 10 bucks. You'll never play visionary by yoloing into Bitcoin because you knew it was the future. 

Active and concentrated portfolios lead to great stories (good and bad). Passive and diversified ones lead to snores. No one wants to hear about your market-capped weighted ETFs. Except maybe me. 

This cost is also a feature. The lack of speculation, the lack of big movements, the lack of activity allows you to sleep at night. With the right portfolio, everything will take care of itself.

While it sure looks fun, old me will probably thank me for thrill seeking outside of my retirement account. 


Popular posts from this blog

The Art of Giving Feedback

Constructive feedback is an awkward affair. You don't want hurt feelings, but recognize the importance of honesty. You've tried the classic "hoping things will get better on its own" and unfortunately it hasn't played out. When giving feedback, here are a few things that I try to keep it mind. Start with empathy. Step into their shoes and understand their story. If you don't know, ask. Be genuinely curious. Feedback is a dynamic affair. Shared communication with a shared goal towards progress. Take the emotion out of it. Focus on the situation, not the person. Focusing on the person adds unnecessary weight to an already emotionally-bloated event.  Be specific. Give clear examples. Vague feedback equals dismissed feedback.  Doing above won't de-awkward things fully, but it will dampen it and increase the chance of better outcomes. 

Bias For Clarity

Bias for action. Gets things done. Go-getter. Traits companies big and small look for. And for good reason, you're being hired to do things! However, action is a secondary step that often overshadows the primary step, direction.   Clear direction is the foundation that enables our actions to takeoff. Without it, we're stuck in the mud.  Striving for clarity is an underrated skill. Having the courage to ask ( seemingly ) obvious questions, and to check in, making sure we're all on the same page. "O bvious " questions are a low risk, high reward way to add value. At worst, you'll add confidence to our actions. At best, you discover a misalignment that saves us from a dead-end.  The more people, the more clear we need to be. The bigger the initiative, the bigger the risk of reaching the finish line, only to realize expectations were off.  Success is always uncertain. But we can be certain about what we want and what everyone's job is. Things that can be clea

Negative Feedback, Positive Lessons

In the battle against plastic bags, a five-cent tax was shown to be much more successful at deterring usage than a five-cent credit for bringing your own bags. Carrots satisfy but sticks sting, and they sting hard. So we default to the less painful choice of avoiding loss. Loss aversion impacts the way we process information. A 2019 study  invited participants to learn through a series of multiple choice questions. Each question only had two options to choose from. Whether guessing correctly or not, they would still learn the right answer.  Despite the identical learning opportunity, participants were much more successful at recalling the answers they guessed correctly than those they got wrong.  "You're right!" feels good. We savour the moment, analyzing every detail.  "You're wrong!" stings. We want to quickly forget, dismiss, and move on.  When we succumb to loss aversion, we miss opportunities to learn. Failure is part of the process. We'll experie