Great Investors Don’t “Rubber Stamp”

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“We don’t make investors more successful by giving them portfolios that pander to their fears. We don’t change the portfolio, we change the person – if he will permit us to do so. We do that by leading him to better temperamental values, chief among which are 1. Tolerance for ambiguity and 2. Resilience.”
Nick Murray

In last month’s article, I shared some wisdom from the greatest investor of all time. This month, I discuss a new way to think about “asset allocation.”

To start, let me share that I am proud to announce the publication of my new book, “Clarity: How Popular Culture is Misleading You About Successful Wealth Planning and What to Do About It.”

While I was writing my book, I surveyed a group of clients and friends about some of the key wealth planning issues that were causing them confusion so that I could address them in my book. There was one response that I found particularly interesting: this “rubber-stamped” approach of being more conservative with assets as you age stops making sense if you have more than you will ever spend. More →

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My Latest Book is Now Available: Clarity

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“The world into which we take this belief system will always regard it as not merely countercultural but counterintuitive. For the sake of simplicity, let’s reduce it to its essence. Once and for all, now and forever: Successful Investing is Counterintuitive.
Nick Murray

I am very proud to announce the publication of my second book, Clarity: How Popular Culture is Misleading You About Successful Wealth Planning and What to Do About It. The book is now available, and below you can find information on how to get your own copy!

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Announcing My Latest Book: Clarity

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“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”
– Mark Twain

Peter Lynch was the legendary portfolio manager of the Fidelity Magellan fund, and he is widely regarded as one of the most successful investors of our time. He once said that you can’t get a high school diploma in America today without knowing what a cosine is; however, millions of Americans graduate from high school every year without knowing the difference between a stock and a bond. The United States is the wealthiest capitalist nation in the history of the world, yet we don’t teach our children basic financial literacy.

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Simplicity, Complexity, and Chaos

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“Life is really simple, but we insist on making it complicated.”
– Confucius

A Great Read

Our team here at Concentus recently discovered a great article from Farnam Street that we all really loved, and we hope you will enjoy: “Complexity Bias: Why We Prefer Complicated to Simple.”

The article is somewhat lengthy, but it’s worth a read. In essence, it explores the human cognitive bias known as “complexity bias,” a hardwired human tendency to “give undue credence to complex concepts.” The article discusses two primary implications of complexity bias that I found quite interesting and that are particularly useful to understand in relation to investing and wealth planning.
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Regret

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“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.”
– Peter Lynch, legendary investor

The “Inevitable” Correction

Last week I had a meeting with a new prospective client that got me thinking. This gentleman recently sold his company, and had the good fortune of receiving a multi-million dollar payday, so we were meeting to discuss his financial and investment planning. We discussed the merits of investing his capital in the equity market, and he agreed heartily that ownership of a portfolio of great companies would be the best way for him to sustain his income, and maintain his wealth, over the next 30 years of his retirement. However, he had only one condition for the implementation of his investment plan: He wanted to hold off on investing his cash into the equity market until stock prices pull back, because, after all, “a major crash is inevitable.”
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