Play football like the Seahawks but invest like the Packers

I was lucky to get a seat in a private presentation by Barry Ritholtz while he was in town for the CFA Seattle event. I wish there was a slide deck or a recording or something I could share… but alas there was nothing of the sort. The two thoughts that were bouncing around in my head for a few days after the meeting are fairly simple, but they mean so much. Regardless of how you invest or what asset classes you invest in, there are some takeaways here for everyone!

Reduce the noise

Although we all know this… or at least we should all know this, it is hard to actually implement. I found myself today unsubscribing from a few investor mailing lists I’m on. They didn’t ever provide any value to my bank account or decision making process, but I thought they may have information that could be important… at some time in the future… maybe. Pfff – thanks Barry for the slap in the face that cutting out written infotainment is just as important as cutting out live performance infotainment. I turned off CNBC and the like a long time ago, but my useless obsession with reading information was still misguided.

More focus on annual/quarterly/proxy reports, more focus on books that include valid research on investing, and more books/interviews with great thinkers. From books by Les Schwab about his own business to the highly recommended Business Adventures by John Brooks. I’d also recommend Barry’s Master in Business podcast. It is a Bloomberg production… but he interviews some seriously interesting people that I’ve learned a lot from. I’ve been getting better at reading the reports as well, it is a slow learning process that isn’t really discussed in many books, articles, or newsletters.

You’re not designed to be an investor

This one is even less intuitive than the first… Crossing the street we don’t tend to take a lot of risks because we can see them barreling down on us. Of course if they ran a red light and we suddenly notice them as we start to cross the street, the reaction is to step off the street and back onto the sidewalk… We do the same in the markets, when the market barrels through the stop lights and surprises us we react by protecting ourselves by any means necessary. The ability to set this reaction aside and consider all the information we have and all the decisions we can control is not easy to do during what seems like a crisis. This is simply human nature and investing with this in mind is important. This is true if you’re a momentum investor, a value investor, or an indexer… thinking about your destination (which is likely a long ways off) and the the things you can control now (which is likely pretty limited) means that taking some of those risks makes sense.

If you stopped for a second and noticed the car that ran the red light was headed straight for a pole down the street, you may not step off the street but instead stand and wait for it to pass before progressing. The same is true with major scares in the market. If you stop and look around for a minute it may be more obvious that the seemingly detrimental risks are not going to affect you and in fact may be an opportunity… you may get across the street faster than your colleague who backed off when the car ran the light.

The conversation was much more about worrying the things you can control and not listening to or attempting to predict the things you can’t control. Once you’re thinking about the things you can control, the question is how do you take risks you understand to receive an investment reward. This was right after the Seahawks v Packers NFC championship game so football analogies were abundant and I’ll extend them here… This safe approach to investing is more like the Packers played while the approach that is more likely to fail (Gambling in penny stocks and the like) was much more like the Seahawks… you can win at it, but the odds are against you.The funny part is GeekWire recently ran an op-ed peice by Greg Gottesman on the things you can learn from the Seahawk strategy.

Barry Ritholtz and Howard Marks

Of course Barry’s CFA interview with Howard Marks was the main reason he was in town and there are some fabulous tidbits that CFA Seattle tweeted from the interview that I’d like to share with you…

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