As I write this post on Friday afternoon, we have already seen a number of significant upsets in the tournament. Mercer over Duke! Come on, how many people even knew that Mercer University was in Macon, Georgia and it fielded a men’s basketball team? Harvard on a roll? The madness continues.
Each year, the NCAA tournament provides a great example of the unpredictability of the future. The nation’s collective basketball wisdom comes together to seed the teams and the crowd goes wild filling out brackets in search of big payoffs. There is no denying that March madness is a lot of fun and very entertaining. But only a few folks take it seriously enough to think they have a real chance of predicting the final four and the eventual winner through skill instead of luck.
Unfortunately, investments is a similar but different exercise. Far too many people think they have the skill to outsmart the market and somehow beat it. Even more preposterous is the hollow promise of Wall Street saying it can beat the market for you. There is a mountain of evidence that shows just how badly they have delivered on that promise. While it is fun to be a speculator on basketball brackets, speculating is harmful to your financial life.
After spending several weeks on the dangers of speculation, I unveiled part of the process of becoming an investor on last week’s program. This week, I will cover in detail the five important choices or decisions that guide an investor through thick and thin. A prudent investment process is paved with strong convictions and a steady hand even as short-term events rattle financial markets.
This weekend, I will outline specific steps on how to be an investor instead of a speculator. Whether you make your own investment decisions or you have an advisor, these are steps an investor focuses on.
Remember, financial markets should be working for you instead of against you. You don’t need to outsmart or outperform financial markets to achieve your wants and needs. I don’t know how many people selected Mercer over Duke in this year’s NCAA tournament, but I still have not met anyone who predicted financial market tops or bottoms either. The great news is you don’t have to! Don’t confuse your role as an investor, which is to provide capital to financial markets and to harvest the gains over time. Stop speculating and stop following the advice of speculators. That is a game not worth playing.
Sit back and enjoy the tournament and leave the speculation on the basketball court. Tune in on Sunday morning at 8 AM on KNBR 680 AM to learn how to be an investor instead of a speculator in financial markets. Enjoy the weekend!