Sep 29, 2022

FIEGI Report (9/29/22) – How to Invest Better and Live Better

Written By: Ryan Fiegi

Good morning, everyone! We’re going to go back to the David Booth well for our REPORT this week. David Booth is one of the best minds and all-around people in the industry. He is the Executive Chairman & Co-Founder of Dimensional Fund Advisors and we’re extremely grateful that he’s on our team. Enjoy!

How to Invest Better and Live Better (4-min article)

Summary: There are many true financial principles included in this article, a few include:

  1. Uncertainty – you don’t have to PREDICT, but we all have to PLAN. You can feel empowered by uncertainty. Without it, there would be NO opportunity.
  2. Compounding – not just financially (although the market has returned on average ~10% a year over the past 100 years); but also, the life equivalent of compounding interest is wisdom. Learn from the past to make better decisions in the future.
  3. Decision Making – it’s extremely easy to judge decisions based on the results. Instead, we want to focus on the decision-making process, not the results. Or another way to say it; go back to the time the decision was made, would you have made a different decision if you didn’t know the results?
    1. There’s even a sports term for this: Monday Morning Quarterback. It’s easy for Stephen A. Smith to go on his ESPN show Monday morning and critique the results from the decisions of the coaches on the prior Sunday. Notice how Stephen A. does not look at the decision based on all the evidence at the time the decision was made; nor does Stephen A. have to make those decisions in real time.
    2. Another example is the lottery. From Google, the odds of winning the Powerball Jackpot are 1 in 292,201,338. Should you decide each week to play the lottery. No. The probabilities are forever against you. If you win the jackpot, did you make the right decision? The true financial principle would still be no, you just got lucky and beat the odds THIS time. Luck, unfortunately, is not a financial principle we can trust over time; and we certainly don’t want to play that game with your hard-earned investments. Investing in individual stocks is akin to luck. Instead diversify over thousands of stocks to give yourself the best probabilities of beating the lottery.
  4. Live Life – go easy on yourself. Learn from your disappointments. Enjoy your successes. Approach others with empathy. If you’ve followed a solid plan to the best of your ability, you’ve put yourself in the best position to achieve success. Don’t ruin your state of mind by obsessing after the fact.


Monthly Quote:

“The important thing about an investment philosophy is that you have to have one you can stick with.”

-David Booth

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