Are you an honest DIY investor?

If you have been fortunate to build some savings, you will soon face a decision.

You, or somebody you trust, will need to manage your money.

It does not matter if you put all your money in Index funds, or in money market accounts, or in CDs -  there is somebody, somewhere affecting your investment success. We have seen many individuals invest their money as true professionals, and we have seen so called “investment professionals” invest clients’ money in an amateurish fashion.

It does not matter who invests your money, but what does matter is their mindset. Are they amateurs or professionals? Many great posts have been written before on this topic*, but how could it apply to what we see so often in investing? Can we be truly honest with ourselves about the mindset of whomever is managing our money?

We are one of the few financial advisors that will tell you that anyone can manage their own money. But it does not matter what you “can” do. There are a lot of activities you can do.  How many of those do you trust you will do the difficult, the most uncomfortable thing that is required for long term success?  Part of maturity in any endeavor is the calm acceptance of reality, allowing us to turn our attention to those things that are more meaningful to us, and where we can be better than average.  Can we be truly honest with ourselves about our proper mindset when managing our money? We have no doubt that many people can. Thinking through the following paradoxes may help.

Amateurs predict market action. Professionals position for market action.

Amateurs blame others for their losses. Professionals accept responsibility.

Amateurs focus only on the outcome; professionals focus on the process and confidently know the outcomes will take care of themselves.

Amateurs focus on what they can see in the markets. Professionals focus on what they can't see.

Amateurs value the one stock that doubled in price, even if it is not repeatable. Professionals value the things that are repeatable and do those consistently.

Amateurs want to get even with their losses. Professionals want to get better.

Amateurs get excited by seeing just great past returns and maximum drawdowns, professionals first get comfortable digging deeper to create a more complete picture of the future possibilities.  

Amateurs focus on how the market should be. Professionals focus on reality and how the market is.

Amateurs focus on absolute outcome or return. Professionals focus on the most reliable or probabilistic outcome or return.

Amateurs think they are almost always right about the market. Professionals know that many times they will be wrong about the markets and have the humility to accept that.

Amateurs have memorized the rules. Professionals also know the exceptions.

Amateurs think that knowledge in one area means they can quickly attain knowledge in another. Professionals stay in their circle of competence, regardless of how “easy” something else looks.

If you think a more professional approach could be beneficial for even a PORTION of your funds, please reach out to us to explore a potential fit. 

*Turning Pro: The Difference Between Amateurs and Professionals (fs.blog)