The Holy Grail of Investing

Tony Robbins recently wrote a book, The Holy Grail of Investing. Based on Robbins’ notoriety and the title of the book, my guess is that many people will buy the book and shortly thereafter experience regret for having wasted their money and time. You can all save time and money by reading Nick Maggiulli’s unbiased assessment of the book.

I reflected on what realistically could be considered a Holy Grail of investing. I believe it has more to do with our perspectives and actions we take than a specific security or strategy.

The Holy Grail of Expectations and Beliefs

When advisors are profiling their clients, “knowing your client,” they seldom discuss what the client’s expectations and beliefs are when it comes to investing. Sure, the client will expect to achieve a certain rate of return, but I’m talking about the expectations that can influence an investor’s actions.

Do they believe market “experts” can predict the market? Do they expect you to be able to steer clear of bad times and make sure they participate in all the good times? Do they believe that market certainty can be had? Or that we can control how much portfolio values will fluctuate?

Having realistic expectations and correct beliefs are a major part of the Holy Grail of investing. Investors must accept the fact that instability, uncertainty, and wild fluctuations are inherent characteristics of the stock market, and not pretend or act like it should be another way.

The Holy Grail of Investment Decisions

The greatest influence on long-term return isn’t so much what the market does, it is the choices investors make as the market goes up and down. In other words, our behavior as investors has a lot to do with our ultimate success (or failure) as an investor.

The Holy Grail of investor decisions comes down to the choice to be patient during difficult times, exercise discipline to our investment strategy, and practice strategic ignorance along the way. Strategic ignorance is when we choose to be ignorant of something. When it comes to investing, ignoring daily market moves, headlines, “expert” predictions, and recent portfolio performance are all part of the Holy Grail of investing.

Financial Advisors and the Holy Grail

Advisors are in a fantastic position to help their clients know what to pay attention to (things they can control) and what to strategically ignore. Unfortunately, too many advisors are still sending “market updates” to clients which sends the signal that investors should pay attention to every move and every headline.

Being patient, disciplined, and focusing on those things we can control constitutes the real Holy Grail of investing.

– JAY

(c)2024 Behavioral Finance Network