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People Change, These Investment Lessons Won't

Updated: Sep 10, 2021

Twitter can be a cesspool. I found it particularly toxic during the March lock-in and COVID market sell-off. A free-for-all of sorts where strangers can hurl insults to anyone in the world.

It can also be a great way to access some of the brightest minds on the planet unfiltered. Every now and again, a user can strike Twitter gold.

The below thread is a sampling of ideas from Morgan Housel, a venture capitalist and one of the most talented writers out there. Note: the thread was created by another user who had compiled a list of Morgan's principles and created a Twitter summary.

Morgan's view of the world is likely to stand the test of time. Evergreen beliefs that won't change, even as people do (I only shared a few of Morgan's quotes, there were nine in total).

I started to jot down my list of beliefs about investing, behavior, and financial services, etc. Once I caught a rhythm, the ideas flowed out. Some of these principles are loosely based on things I've seen other people write, others are observations from my work as a partner of a growing RIA.

Whether you're a do-it-yourself investor, working with another advisor, or a Pure client, I hope these nuggets make you a better investor!

Making investment decisions based on financial news is like watching WWE to craft a personal workout plan.

Having an information filter is extremely important. Being able to identify garbage vs. meaningful information is an underrated skill.

Investors will always obsess about things they cannot control, while ignoring the biggest risk to their financial plan - themselves.

Simplicity is often confused with laziness or stupidity, while complexity is associated with brilliance. When in doubt, simple beats complex.

People have the tendency to always want to do something. When feeling the urge to do something, most people would be better off doing nothing.

Whenever you have a strong conviction on a stock or asset (either good or bad), someone very smart has the opposite viewpoint. Understand both sides of the equation.

"Stay the course" can be good advice if your portfolio fits. It's awful advice if you're invested incorrectly.

Low cost investing beats high cost investing.

Pay attention to your net of fee & after-tax returns. Pay more attention to the risk you’re taking to get there.

There are some very good financial advisors. There are more advisors that have absolutely no clue what they’re doing.

People love a good story. People should prefer empirical evidence.

Avoid extreme opinions and views, investing is full of nuisance.

Investing in active mutual funds is one of the biggest shams out there.

Focus on optimizing your process for making investment decisions, not the results.

Seeking financial advice from big Wall Street firms will cost you, both in higher fees and conflicts of interest. Charlie Munger (Warren Buffett's business partner) was quick to pick up on this, “Show me the incentive and I’ll show you the outcome.”

The ability to change one’s mind is imperative to being a good investor. Be able to change your mind when facts change.

Mixing politics and investing seldom works. People will give a politician way too much credit when things go right and too much blame when things go wrong.

The more investment decisions one makes, the greater likelihood you’re going to be wrong.

A bear market is a horrible time to find out your true tolerance for risk.

We all have biases and blind spots, acknowledging and recognizing will help you mitigate destructive behavior.

Financial advisors should have to disclose how they’re personally invested. Watch what they do, not what they say.

Market forecasts are completely worthless. See 2020.

Most people think all financial advisors are the same. This is a wrong and dangerous assumption.

People have the tendency to overweight recent events (recency bias). Market down, we’re all screwed. Market up, let’s party!

Let us know if you agree or disagree with our list, or if you have a long-term belief that has served you well!

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