The Difference Between Simple & Easy
By Dan Toledo, CFA, CFP®January 10, 2019
The Difference Between Simple & Easy
Sometimes we forget that there is a difference between simple and easy. Just because something is simple doesn’t make it easy. Running a marathon is simple. As someone who’s done it once, it’s not easy!
A long-term investment strategy is no different. On the surface it’s simple - buy low, buy more, hold forever. In reality, it isn’t easy. Watching the market fall 15% in a month is like getting a cramp in the 16th mile. It hurts, but the race isn’t over, and there’s still a long way to go. Success depends on what happens next. Focusing on the pain or what you wish you’d done won’t get you to the finish line.
Positive thinking is a simple concept that in practice isn’t easy; it becomes even harder when you surround yourself with fear and regrets. As markets limp into 2019 there are lots of political and economic unknowns. Looking back on 2018, it’s easy to identify things that went wrong, but have you thought about what went right?
Both the New York Times and Wall Street Journal published articles last week about why 2018 was the best year ever. Whether you agree or disagree with the specifics of the articles doesn’t matter - what matters is that in aggregate, society is getting better and the combination of innovation and economic growth will continue to make life better for millions of people around the world.
The simplest way to participate in this growth is to own a broadly-diversified global portfolio. It can be as simple as buying one or two ETF’s and cost next to nothing. Accepting that there will be periods of negative returns and relative underperformance will not be easy, but it is achievable on your own.
If you want to do more than participate and want to beat the market, you will need to be different than the market. While simple, once again these decisions are not easy. What tilts should you take, when should you make them, and how much you should pay, are all questions you will need to answer.
Hundreds of books and thousands of articles have been written containing the answers. Most of them are written by experts with extensive knowledge and verified research to support their conclusions. Most dieting books are also written by qualified experts, but that doesn’t mean you’re losing weight.
Once again, with dieting, it’s not knowing what to do that’s difficult, it’s doing it. More importantly, it’s doing it again and again and continuing to do it even after you have done it once and remember how hard it was. Most people are able to start a diet and commit to it for a few months. However, for most, something eventually happens and they go back to old habits and eventually put the weight back on.
Successful investment plans are the same as successful weight loss plans. They require both the desire and the dedication to commit. As with many things in life, the more thought given to the plan, the higher the likelihood of success. Too often, when left to our own thoughts, we daydream about the destination instead of planning the path.
Most people that successfully get in shape don’t do it on their own. While they know the simple basics of what should be done, they recognize it isn’t easy and look for support. Whether it’s a nutritionist, personal trainer, doctor or family friend, they don’t do it on their own.
As with dieting, a successful financial plan depends on finding someone who understands your personal goals and unique situation. Along with setting reasonable expectations, it requires commitment and measurable achievements along the way.
The best athletes in the world surround themselves with a plethora of ‘experts of the simple.’ Bolt has a speed coach, Phelps has a swim coach, Woods has a swing coach. It’s not because they don’t know what to do, it’s because they know it isn’t easy to repeat. Even with superhuman abilities, they recognize success isn’t guaranteed and they accept that they can’t do it on their own.
There’s no question that the modern cornucopia of index funds and personal financial websites has made doing it yourself simple. The question is: have they made it any easier for you to finish your marathon? If not, let’s talk.
Dan Toledo, CFA, CFP® is a Senior Advisor at Chicago Partners Wealth Advisors. Dan has been helping individuals, institutions, and foundations manage their wealth for over 8 years.
Important Disclosure Information
Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Chicago Partners Investment Group LLC (“CP”), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from CP. Please remember to contact CP, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. CP is neither a law firm nor a certified public accounting firm and no portion of the commentary content should be construed as legal or accounting advice. A copy of the CP’s current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request.
January 10, 2019
The Difference Between Simple & Easy
Sometimes we forget that there is a difference between simple and easy. Just because something is simple doesn’t make it easy. Running a marathon is simple. As someone who’s done it once, it’s not easy!
A long-term investment strategy is no different. On the surface it’s simple - buy low, buy more, hold forever. In reality, it isn’t easy. Watching the market fall 15% in a month is like getting a cramp in the 16th mile. It hurts, but the race isn’t over, and there’s still a long way to go. Success depends on what happens next. Focusing on the pain or what you wish you’d done won’t get you to the finish line.
Positive thinking is a simple concept that in practice isn’t easy; it becomes even harder when you surround yourself with fear and regrets. As markets limp into 2019 there are lots of political and economic unknowns. Looking back on 2018, it’s easy to identify things that went wrong, but have you thought about what went right?
Both the New York Times and Wall Street Journal published articles last week about why 2018 was the best year ever. Whether you agree or disagree with the specifics of the articles doesn’t matter - what matters is that in aggregate, society is getting better and the combination of innovation and economic growth will continue to make life better for millions of people around the world.
The simplest way to participate in this growth is to own a broadly-diversified global portfolio. It can be as simple as buying one or two ETF’s and cost next to nothing. Accepting that there will be periods of negative returns and relative underperformance will not be easy, but it is achievable on your own.
If you want to do more than participate and want to beat the market, you will need to be different than the market. While simple, once again these decisions are not easy. What tilts should you take, when should you make them, and how much you should pay, are all questions you will need to answer.
Hundreds of books and thousands of articles have been written containing the answers. Most of them are written by experts with extensive knowledge and verified research to support their conclusions. Most dieting books are also written by qualified experts, but that doesn’t mean you’re losing weight.
Once again, with dieting, it’s not knowing what to do that’s difficult, it’s doing it. More importantly, it’s doing it again and again and continuing to do it even after you have done it once and remember how hard it was. Most people are able to start a diet and commit to it for a few months. However, for most, something eventually happens and they go back to old habits and eventually put the weight back on.
Successful investment plans are the same as successful weight loss plans. They require both the desire and the dedication to commit. As with many things in life, the more thought given to the plan, the higher the likelihood of success. Too often, when left to our own thoughts, we daydream about the destination instead of planning the path.
Most people that successfully get in shape don’t do it on their own. While they know the simple basics of what should be done, they recognize it isn’t easy and look for support. Whether it’s a nutritionist, personal trainer, doctor or family friend, they don’t do it on their own.
As with dieting, a successful financial plan depends on finding someone who understands your personal goals and unique situation. Along with setting reasonable expectations, it requires commitment and measurable achievements along the way.
The best athletes in the world surround themselves with a plethora of ‘experts of the simple.’ Bolt has a speed coach, Phelps has a swim coach, Woods has a swing coach. It’s not because they don’t know what to do, it’s because they know it isn’t easy to repeat. Even with superhuman abilities, they recognize success isn’t guaranteed and they accept that they can’t do it on their own.
There’s no question that the modern cornucopia of index funds and personal financial websites has made doing it yourself simple. The question: is have they made it any easier for you to finish your marathon? If not, let’s talk.
Dan Toledo, CFA, CFP® is a Senior Advisor at Chicago Partners Wealth Advisors. Dan has been helping individuals, institutions, and foundations manage their wealth for over 8 years.
Important Disclosure Information
Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Chicago Partners Investment Group LLC (“CP”), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from CP. Please remember to contact CP, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. CP is neither a law firm nor a certified public accounting firm and no portion of the commentary content should be construed as legal or accounting advice. A copy of the CP’s current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request.