The Nazz, Captain Beyond, The Eagles, and the truth. Thanks for reading.
Truth
There can be considerable controversy these days about the truth. I consider this debate to be mostly driven the tyranny of the few, yet it is an issue. Does it even exist? Should everybody "do your own research"? Can any source be trusted?
“I may be wrong, but I’m not wrong long”. This might be a definitive statement about our thought processes. A few things tend to happen as we if we investigate our beliefs:
We might search for and consult a variety of sources. The process might confirm or disconfirm our belief(s). We then take a new position, based on what we have learned (or perhaps sustain our current position, depending on what we have learned).
We flatly refuse to consider any disconfirming evidence by sticking to our position with no research (“I know I’m right”) at all or '“doing our own research”. We seek only the supporting evidence (confirmation bias) or we concoct a story from the evidence we find such that the narrative we find or construct confirms our position (motivated reasoning).
Either way, we are not wrong long - in our own minds. As to whether we truly are or are not wrong, we have to get outside of our own thought processes to learn that. This requires the belief that there could be a set of facts that might disconfirm our
hypothesisbelief.
Go to TikTok, Twitter, Instagram, and who knows how many other places. You will find people promoting all kind of "investing" strategies. APES, whales, coins, indexed variable universal life insurance, indexed annuities, stick it to the PE/VC, (failing retailer) to the moon. Might one or more of these be decent investments? Sure. Have many new products not been what they were projected to be? Why, yes. Should we be surprised? No. Product manufacturers are for-profit businesses. Salespeople for those businesses (It pains me to say it: many people who call themselves financial advisors are salespeople) are highly compensated and incented to sell product. Therefore, manufacturers become motivated to construct datasets to prove their product is likely to have a favorable result for the purchaser. Salespeople want to believe the narrative. Are they intentionally doing this? I cannot say. I do know how the brain works. It will construct a narrative around the data that supports the desired (not necessarily likely) outcome. Creating a successful backtest is not that difficult.
“It is difficult to get a man to understand something when his salary depends upon his not understanding it!” Upton Sinclair.
I have no desire to construct my own fantasy investing world, no matter how much I enjoy Captain Beyond. What I desire is to find a means of creating financial security, for me and those I serve, using facts, using truth, that is sustainable and not going to be broken in the long-term by a bank run, short squeeze, or some “news” on Reddit.
Here is why "investing" was previously in quotes. There is roughly 100 years of reliable data about a broad array of investments. This data is incontrovertible. It comes from real money that real people have made (and lost) on real companies, currencies, and commodities. A "fake news" scheme of this magnitude is not at all feasible. Every single day, hundreds of thousands, if not more, investment professionals are using this data to drive their investments. Significant, highly profitable businesses are founded on it, from Morningstar to Blackstone to Blackrock to Fidelity to Vanguard to American Funds to AQR to Richmond Quantitative Advisors to ours. These cannot all be fake. If they were, we (and they) would all be broke. The US dollar and nearly all other major currencies would be worthless.
Can you do your own research? Of course. Are you, unless you dedicate your professional life to this, likely to uncover a new strategy that works? Not probable. Not impossible, just not likely. It is much more likely that you will discover a time- and data-tested process, one that currently exists (and likely has, for a long time, as there is little new in the world), will work just fine with consistent deposits and little trading. There is intense, professional research competition and extremely few innovations. Can you find "research" that purports to discover a new, guaranteed strategy? Sure. This is for sale every damn day. If it really worked, I think the sellers would keep it to themselves until such time as they'd made few hundred million or a few billion (in their currency of choice, and mostly in USD). Instead, they retail said, purported innovation to the public, making their profits on the subscription. Once they retail it to the masses, even if it worked at small scale the volumes of dollars flowing into the trade would break the trade.
There are several trustable sources. The most valuable research tools/data do not need to be aggressively sold. Not one of them is likely to be someone who wants to “be part of your network”, creates a zippy video (or, even better, series of videos), or who sends an unsolicited DM. These are where you are most likely to find untruths, dishonesty, and scams.
Talking my own book? Sure. Have I also seen several big-time scams, taking in smart people? We all have. We are human and susceptible to believing things we want to hear and believe. Are there situations where the truth feels fuzzy, like in this clip? Of course. Should we question long-held beliefs and be constantly uncertain? I believe we should. Every time I look at investment results, and when our team reviews our investment models each quarter, I wonder if there is something better, something we may be missing. We constantly look (I drive our team somewhat nuts doing this, just ask ‘em) at new ideas and products. Not finding testable, proven, disconfirming evidence is the only way that I can be comfortable that we are likely doing the right thing. The result is rarely do we make changes, other than small, tactical moves designed to take advantage of current market conditions, using the same old boring products we used last year and the same old boring strategy. There are truths and facts in investing. Ignore them at your peril.
Or Consequences
You want to be certain? Do your own research. Use your motivated reasoning and confirmation bias to find supporting evidence. Ignore disconfirming evidence. Ignore the turtles, the boring people who have been successful long-term. Be a rabbit. Ignore low costs. Ignore consistency over long periods of time. Get excited over short-term market conditions and trade frequently because you “know” you have found a large and unique opportunity. You will be certain.
Will you be correct? Will you find something no one else has? Are you that person? Can you be the certain kind of fool?
Sundry:
My writing companion this week is the PGA Championship. Try telling a tour golfer (or just about any other professional athlete) that there is no factual or real data.
Your investment timing is far less important than your consistency. See this research (there is lots more supporting this) from Capital Group.