Find Your Thing

I got a call from a friend. I met her at a conference. She was telling me about her broker, she’s not happy. My friend is actually 75 years old and has $400k to her name. Actually, it’s for her and her husband. And they’re losing money. She tells me her portfolio is down “2.85%” vs. the same time period of the S&P 500 being down around 10%. She admits it’s not the advisor’s fault, but she’s “just tired of losing money these last two months”. She’s “tired of the roller coaster”.

I told her, basically, the only way to reduce risk (short-term) is to hold more cash– which pays basically nothing. As it is, she tells me she’s 75% cash and bonds and 25% equities that are paying dividends. So, I asked what she was going to do. She said, “I dunno, I’m going to think about it and decide tomorrow.”

It made me realize that she probably thinks there is something different she can do. Maybe short the market, or find a new money manager, or investment adviser?

Maybe that’s why she was calling me. Trying to find something to make 6% and with no risk, ever. And of course, with no strings attached too.

Basically, she wants magic. She needs magic. The same magic someone wants when they realize want to drop 20 pounds — it’s not magic of course; you have to do the work. But where do you start?

That’s the thing about investing. There aren’t many shortcuts or crystal clear roadmaps. In the end, common sense & listening to yourself is usually the best medicine. But sometimes the reptilian brain & self-delusion get in the way. So, it’s always better to know thyself truly.

Yesterday, Abnormal Returns (as usual) found a great article & linked to Jason Zweig’s WSJ piece on the new breed of investor profiling tests.

These new tests are marrying psychology & personality tests with investor profiling– and I have to say I’m impressed with what I see. has tests for traders, investors, and general wealth management topics like a Financial Values Questionnaire. Oh, and BONUS, most of the tests are free.

Behavioral finance work like this, I think, will go a long way toward helping people find their thing; offering a brand new (truer to thyself) perspective on things.

Maybe it will help people like my poor friend who, tomorrow, will arbitrarily decide what to do based on last month’s performance instead of doing the work to find her thing.

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