As seen in

Why Avoiding Stupidity is More Important than Being Smart – Presented by Mark K. Lund, Financial Advisor in Utah

Financial Advisor UtahThere are times in life when you should try to win. And times when it’s smartest to simply avoid losing.

Take tennis, for example.

Simon Ramo, a scientist and statistician, demonstrated that professional tennis players and weekend tennis players play a fundamentally different game. “In expert tennis,” he writes, “about 80 percent of the points are won; in amateur tennis, about 80 percent of the points are lost.”

In other words, the final outcome in professional tennis is nearly always the result of the actions of the winner. While in amateur tennis the outcome is nearly always determined by the actions of the loser. You win in the pros by making great shots. You win your weekend game by keeping the ball in play long enough for your opponent to make a mistake.

Financial analyst and noted author Charles Ellis famously demonstrated that investing, like amateur tennis, is a loser’s game. This doesn’t mean it’s for losers. It means that, for the best chance of coming out ahead, your best strategy is not to try to make winning moves, but instead to avoid making errors.

But wait a minute, you might say. What if I’m “really smart” when it comes to identifying potentially undervalued stocks or market sectors? As investment writer Bob Seawright observes, being smart would be helpful when trying to beat the market, if it weren’t for all the other smart people trying to do the same thing.

He writes that, “the existence of other smart people together with copycats and hangers-on greatly dilutes the value of being market-smart.”

On the other hand, bad decision-making is not diluted by numbers. In fact, as Seawright points out, the greater the number of people acting stupidly together (in investing), the greater the aggregate risk and the greater the potential for loss. (See meme stocks.)

However, many people want outsized gains in the short-term without recognizing the real risks of speculation. And investing with a widely diverse portfolio is very unlikely to give them that. That’s not what it’s designed to do. Diversity is a strategy for consistently pursing potential growth over the long-term and under all kinds of market conditions.

But, it turns out, getting exceptional gains for a short time is not nearly as effective as achieving reasonable gains for a long time.

As Berkshire Hathaway partner Charlie Munger told Wesco Shareholders, “It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”

One of the biggest benefits of working with a trusted financial advisor is having them help you avoid those ill-conceived moves that can greatly hamper your progress in reaching your goal. Not only do they offer you expertise, but also the experience that comes with helping many other clients facing similar challenges.

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.
11576 S State Street, Bldg. 1002
Draper, UT 84020

Sources:
1. http://go.pardot.com/e/91522/p-dont-be-stupid/93st8k/2074660102?h=Hf4E9Sox6fAwc6vSj279fRBR0IfQ23pDtEDO1YC0hA4

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 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.

Book a Free Consultation

To Begin The Proces Simply call or Click "Let's Begin"

Once you schedule your free initial consultation, we will send you a short First Appointment Questionnaire. The First Appointment Questionnaire gives us a brief overview of how you envision retirement, your current situation, and your investment experience. When we meet, we will clarify how you measure success and what’s most important to you about your money. It’s that simple!

Enjoy retirement as you’ve always envisioned

We’re here to help, no matter where you’re starting from!

Contact Us

© 2024 Stonecreek Wealth Advisors, Inc. A fiduciary, independent, fee-only, Registered Investment Advisor

Scroll to Top