The 1994 movie Forrest Gump featured one of the best fictional investing decisions in all of film. Late in the movie, Gump receives a letter from his war buddy and business partner Lieutenant Dan, which informs him how Dan has invested the profits from their shrimp business.1
“He’s got me invested in some kind of fruit company,” says Gump, holding up a letter with the old Apple Computer logo.
It’s been estimated that, in real life, the pair’s $100,000 investment in the mid-1970s would have given them a 3% stake in the company. Today their share would be worth more than $90 billion.
Never mind that the movie is a social satire predicated on a series of incredibly lucky outcomes for the decent but simple Gump; that the screenwriters had the advantage of 20/20 hindsight; and that Lieutenant Dan’s winning gamble was the equivalent of hitting a hole-in-one golf shot while blindfolded. Some people today believe they can identify and buy “the next Apple” before it gets big.
In reality, successful long-term investing will yield very few home runs. And because a diverse strategy aims to choose asset categories that can move in dissimilar directions, it gives investors a lot of chances to feel a little regret.
John “Jack” Bogle, the founder of Vanguard and a pioneer in low-cost, mutual fund investing, often felt like he was missing out somehow. He was known for splitting his personal investments evenly between stocks and bonds in a 50/50 portfolio. This financially brilliant man said, “I spend half my time wondering why I have so much in stocks, and about half wondering why so little.”2
Advisor Ben Carlson observes that some investors regret missing out on big gains while others experience more regret when they participate in big losses. He says, “A balanced portfolio is a simple way to minimize regret by spreading it around, but it never goes away completely.”
It’s worth noting that when retirees talk about their regrets as they look back on building their nest egg, they most often feel remorse over their own actions, not failing to guess big wins. For example, they often feel like they could have started investing earlier or saving more aggressively.
The prudent investor knows that the things they will most regret are the self-defeating actions taken because of ignorance or in reaction to their emotions. They know that a trusted fiduciary retirement planner can guide them with a plan designed for their specific circumstances and needs. And that he or she can help them continue toward success even when they feel their goal is impossibly far off.
If you ever have any questions about your investments or retirement plans, please feel free to give me a call at 801-545-0696.
Regards,
Mark Lund
Stonecreek Wealth Advisors, Inc.
10421 South Jordan Gateway, Suite 600
South Jordan, UT 84095
Disclosure: This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This material was prepared by Efficient Advisors, LLC (“EA’) for Mark Lund, Mark is a Fiduciary Financial Advisor in Utah. He is known as a Wealth Advisor, The 401k Advisor, Investor Coach, Financial Planner, Investment Advisor and author of The Effective Investor. Mark offers investment advisory services through Stonecreek Wealth Advisors, Inc. a fiduciary, independent, fee-only, Registered Investment Advisor firm providing investment management and retirement planning for individuals and 401k consulting for small businesses. Mark’s newsletter is called The Effective Investor Newsletter. Cities served in Utah are: Salt Lake City, Salt Lake County, Utah County, Park City, Murray City, West Jordan City, Sandy City, Draper City, South Jordan City, Provo City, Orem City, Lehi City, Highland City, Alpine City, American Fork City. The views expressed herein are exclusively those of Efficient Advisors, LLC (‘EA’), and are not meant as investment advice and are subject to change. All charts and graphs are presented for informational and analytical purposes only. No chart or graph is intended to be used as a guide to investing. EA portfolios may contain specific securities that have been mentioned herein. EA makes no claim as to the suitability of these securities. Past performance is not a guarantee of future performance. Information contained herein is derived from sources we believe to be reliable, however, we do not represent that this information is complete or accurate and it should not be relied upon as such. All opinions expressed herein are subject to change without notice. This information is prepared for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. You should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. You should note that security values may fluctuate and that each security’s price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Investing in any security involves certain systematic risks including, but not limited to, market risk, interest-rate risk, inflation risk, and event risk. These risks are in addition to any unsystematic risks associated with particular investment styles or strategies.
Sources:
1. http://go.pardot.com/e/91522/-be-worth-today-and-how-much-y/95wm7d/2531537015/h/zbarPpOT2xaTYckTsyzn9p28rQbpYHsQfew4LBAfZiE
2. http://go.pardot.com/e/91522/lio-always-comes-with-regrets-/95wm7h/2531537015/h/zbarPpOT2xaTYckTsyzn9p28rQbpYHsQfew4LBAfZiE
