“Invert, always invert.” – Charlie Munger, the Vice Chairman of Berkshire Hathaway and Warren Buffett’s partner.
Long-term investing is boring. Markets take time, discipline is hard, and being patient isn’t exactly thrilling. It’s been said the human mind rejects ideas that are simple, even if they’re proven to work.
Letting markets do their thing over the long-term might be okay for some, but surely, we can accelerate the wealth building process by using our intuition & investment savvy.
If you’re looking for a fast way to turn a solid retirement portfolio into a smoking crater, we’ve got your back.
Why would we write a blog about, “How to Drive Your Retirement Portfolio into the Ground?”
When we invert complex topics, sometimes the next course of action often becomes obvious. What NOT to do becomes painfully clear.
Charlie Munger, Warren Buffett’s right-hand man, borrowed the idea of inversion from 19th century German mathematician Carl Jacobi. Jacobi believed the solution to complex issues could be simplified if looked at backwards (or inversely).
For example, if you ask a group, “Where would you like to go for dinner?”, the question might result in a blank stares, indecision, or indifference.
If you ask the group, “Where would you NOT want to go to dinner?”, we could eliminate a few restaurants and make the dining choice clear.
Warning: The following is what we think you should not do if you want to keep your retirement plan on the rails.
Be Oblivious to Risk
Our only metric of success or failure that matters is investment performance. Ignore drawdown, diversification, and risk management principles. We want to pile into today’s hottest investment theme regardless of valuation. We select investments that have recently performed well and insist the good times will continue.
Play the Market Oracle
Seek predictions, hot takes, and smart-sounding forecasts. Someone out there knows what happens next. Quickly reposition and implement new ideas based on the 24/7 flow of new information. Click buttons on your phone, go down rabbit holes on the internet, and listen to random strangers on social media. However, only seek out predictions that jive with your own view of the world.
Be a Pessimist
Assume every dip is the beginning of the end. The market dropped 2%? Time to build the bunker and go to cash. Tell everyone within earshot the world is going to hell in hand basket. Make sure to watch plenty of mainstream news.
Remember, pessimists are smart & sophisticated. Optimists are aloof to risk and setting themselves up to get wrecked.
Mix Investing and Politics
Make investment decisions based on front page political news. We want to make emotional decisions based on divisive politics. Every new policy, initiative, bill, or law has the potential to derail the global economy.
Best to hunker down in the safety of cash and wait & see how this plays out.
Refuse the Low Hanging Fruit
We want to keep the focus on external factors outside of our control i.e. market forecasts, politics, global economy, and geopolitics. Let’s ignore the things within our control.
Make sure you’re working with a big public bank, brokerage, insurance company with a history of overcharging and ripping off their clients. If your advisor charges over 1%, doesn’t engage in financial planning, and tries to sell you stuff, even better.
Buy plenty of exotic instruments you don’t understand such as structured notes, alternative mutual funds, illiquid private investments, and opaque annuities.
Be Overactive — Do Something, Anything!
Tinker constantly. Rebalance, rotate, trade — if your portfolio isn’t changing weekly, are you even investing? Chase whatever’s hot, even if you don’t fully understand what you’re buying. You don’t want to miss out while everyone else is making money.
Ignore taxes, fees, and trading costs. Those are for amateurs. You want your CPA to earn every last dollar at the end of the year.
Obviously, we don’t condone any of this behavior.
We exist to help you avoid all the above. Investing isn’t about thrill-seeking or reacting — it’s about discipline, patience, and alignment with your long-term goals. We call it the relentless pursuit of what works.
If you’re prone destructive habits above, shoot us a note insight@pureportfolios.com. We’ll walk you back from the edge.