17 Mar 2022 Your Portfolio Is A Bunch of Metal Parts

I have a simple dream for Beacon’s clients, and it is this: That each one, over time, would think less and less about their portfolio, or at least that they would start to think of it as a collection of metal parts that just needs an oil change every 5,000 miles. That’s the dream. That’s it. (I have others.) I have this dream in down markets like we’re in right now, and I have it even more strongly in up markets.

In November of 2020, I wrote the following during a time when the stock market was hitting all-time highs at the same time the economic effects of COVID began to be obvious:

The world is a complicated place. It always has been and always will be. It’s a place where beautiful and terrible things are happening in the same place and at the same time and sometimes even to the same people. 

Now, having hopefully weathered the worst of COVID, markets are down, and Putin is bombing civilian targets in Ukraine. 

Here is the eternal temptation as an investor: That our portfolios take such a central, obsessive position in our finances that we can read “markets are down, and Putin is bombing civilian targets in Ukraine” or “markets are up, but thousands have been laid off” or “markets are volatile, and your kid has an orchestra recital tonight” and in each instance focus on the first clause. You know if you’ve read many of my blogs that I’m a broken record about values and ethics and all that, but even from a strictly utilitarian point of view this temptation is disastrous.

Look, investing is really important here at Beacon. It’s part of our mission statement—Sensible Investing! This is not me being flippant or dismissive of seeing portfolio values move around, because we internalize that for all of our clients on a daily basis. 

But the amount of energy that many (most?) investors spend worrying about their investments in down markets and marveling over their investments in up markets far outweighs the energy they spend thinking about, just to name a few:

• What will happen to my assets when I die?
• What sort of career do I want to have?
• Where can I find opportunities to save money?
• Where can I find opportunities to spend money on things and experiences I actually value?
• Where are appropriate, cost-efficient places I can offload some risks to insurance companies?
• What are the quality of money conversations I’m having with my partner and how could that quality go up?
• What are my kids and grandkids learning about money by watching and listening to me in this moment?
• What if I gave some of my surplus away?
• What sort of accounts should I be saving and investing in?
• Where can I find opportunities to be more tax-efficient?

And that’s not to mention the non-financial parts of our lives (Ukrainian civilians, kid’s recital) that get crowded out by portfolio obsessiveness.

A sensible portfolio is like an engine manufactured in a pristine factory in Japan. When you buy the car, you want a good engine that will last, and with some fairly regular maintenance it almost certainly will. But it doesn’t make sense to obsess about the engine in the abstract. Will the engine help you if you are lost? No. Will the engine make people like you? No. Will the engine invite friends and family to get in and take a trip with you? No.

At Beacon, it’s our job to care well for your portfolio, because it’s one of many important parts of your financial journey, but also because we want you to be freed up more and more each day from worrying or obsessing over it. The rest of your financial life needs your attention and intention, too.