The Problem with Investing and Self-Deception

Keith Fitz-Gerald Oct 18, 2019

I had lunch with a friend of mine a while back in Venice – Italy – not Beach.

On track to make “partner” at one of the big global investing powerhouses, he said he’s looking forward to making $3 million to $5 million a year. At which point, he’d be successful.

“What would you do then?” I asked.

He thought for a moment then answered, “Take a long trip to Italy.”

Hmmmm, I thought to myself as I took in another slug of café.

That’s what I was doing.

One of the biggest problems with investing is how people view it…

We live in an era where investing is a lesson in deferred gratification when it should be about meeting your life goals.

Wall Street, for example, loves to trot out carefully planned models – many of which are online – showing you how much you’ll have to save to meet a certain income threshold by a specific age. You’ve seen ’em, just like I have.

The “answers” are so daunting that many investors give up… on the spot. Being told you need to save $19,241 a month when you make $5,000 just isn’t helpful no matter how you cut it.

I think that’s a tremendous disservice to investors, and my views got me in a lot of hot water back in the day when I voiced my opinion during one particularly contentious meeting where this kind of nonsense was being discussed.

My view is that the investing models being used today are, for the most part, the financial equivalent of a digital mugging.

Look, not to beat a dead horse here, but the problem with traditional financial planning is that the models being used to do it are almost always based on somebody else’s perspective on how you live your life.

Flip that around.

If your dream is to take a trip to Venice, motorcycle in Shanghai or run the Scottish Highlands then, why wait??!!

I’ve done all three and you can, too.

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My point is that we forget you can make your dreams happen by planning in the here and now.

Chances are you can put off the $5 triple backflip tall skinny latte with a splash of soy in exchange for lugging a thermos of your favorite Kona Blend to the office that cost you all of $0.25 to make. Do that every day for a year and you’re talking $1,733.75 in cold, hard cash.

Throw in money you save by making lunch instead of supporting your local taco stand at $10 a pop and that’s another $3,650 a year. You can play the same “game” with gasoline, groceries, online shopping… you name it.

You can also invest in the right companies at the right time with the right tactics to boost “profits” even further. Suddenly and often before you know it, you’re living on your terms!

That’s really what financial planning ought to be about.

Don’t get me wrong. There is obviously a time and a place for longer-term planning, it’s just not what everyone thinks, or what Wall Street wants you to believe.

To be fair, I also know how hard it is to change. The effects of living your life on somebody’s terms are cumulative, and it can take months – years even – to rewire routines you have in your life.

Let me prove it to you.

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Can you put down your smartphone for an entire hour?

Can you go a week without watching TV?

Could enjoy a three-hour dinner, even if it starts at 10:30pm?

If the answer is no, ask yourself why?

Author Tim Ferris of Four Hour Workweek fame, counsels readers in this position to learn to slow down and to get lost intentionally.

I agree.

Doing so can help you rediscover what matters to you and, of course, your money.

Speaking of which, I hope you’re on board with JPMorgan Chase & Co. (NYSE:JPM).

The bank announced Tuesday that Q3 profits rose 8%, to $9.1 billion, which works out to $2.68 per share versus the $2.45 expected.

Revenue also jumped 8%, to $30.1 billion versus estimates of $28.5 billion, led, not surprisingly, by home loans, auto, and credit cards.

I think the growth speaks volumes about just how capable CEO Jamie Dimon is when it comes to making money in an otherwise flat or declining industry that’s under considerable margin pressure.


Until next time,


One reply on “The Problem with Investing and Self-Deception

  1. Ronald Winter says:

    I thought this article was a decent read, but it left me confused. I was wondering where the “Self-Deception” is that is sabatoging investors.

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