Yesterday a friend approached me giddy with excitement. He'd rolled over his legacy retirement account from an old job into his new Vanguard account, and with that money he'd purchased thousands of dollars of total stock market and total bond market funds!
Pushing the buy order made him feel like the most powerful man in the universe.
I've been meeting for coffee with this friend over the past year. He texts me memorable passages from books by Bogle and Bernstein. It's endearing to meet someone at the start of their career and infect them with the personal finance bug.
There was a time, not so long ago, when purchasing funds at Vanguard gave me the same thrill. Now, not so much.
What do you do when the thrill is gone?
Investors looking for excitement in their investments can do unusual things with their money.
Buy bitcoin.
Enter angel investing (a.k.a. angel philanthropy).
Invest in your cousin's worm farm business.
Anything to regain that high.
It reminds me of another thrill revival scheme gone terribly awry.
Happy Days was a sitcom that emerged in the culturally turbulent 1970s representing a nostalgic version of growing up in the 1950s. It told the story of Richie Cunningham, a law-abiding white teen living in an intact upper middle class nuclear family during a prosperous era.
Richie formed an improbable friendship with Arthur "Fonzie" Fonzarelli, a leather jacket wearing, motorcycle riding ruffian from the other side of the tracks. Conflict was resolved predictably at the 30 minute mark. As a child, I couldn't get enough of this show, and neither could large swaths of America.
Happy Days had several incredibly successful seasons on television. By the time season five came around, the creative juices could no longer conjure interest in the formulaic storylines that had garnered a number one rating for so many consecutive years.
One writer's answer to this boredom was to put Fonzie on waterskis and have him jump over a confined shark in the ocean as a test of his bravery.
It was pure gimmick. It was exciting.
To "jump the shark" became synonymous with a far-fetched and uncharacteristic attempt to introduce extreme novelty, with a corresponding decline in quality.
All of which is to say, when your investing life is boring, it's a sign you are doing it right.
Plain vanilla makes for lousy ice cream, but it's perfect for low cost index funds.
There are plenty of other places (a rock face, under the sea, your bedroom) where you can find healthy avenues to seek excitement without resulting in financial ruin.
Comments 8
Solid advice, as always.
You know what I get excited about? Achieving our financial goals. You know what allows us to get to these goals? Plain ol’ vanilla investing.
It’s amazing what happened when you’re unconcerned about other people’s returns and simply focused on your own goals.
TPP
Author
Dull and steady wins the race (or at the very least, loses it by less). To paraphrase Bernstein, the goal is not to die rich; it’s to not live poor.
I have a very smart friend who has refused to invest retirement accounts in index funds because they are “too boring.”
Despite my repeated attempts at telling why retirement investment should be boring, he maintains his ways. He belongs to an investor group and spends time researching individual holdings etc. Makes him feel like he is an active participant in his retirement.
For me this sounds more like gambling than investing but it is what it is.
I remember watching Happy Days as well. And yes I did watch the Jump the Shark episode too. Hopefully after a couple of years of blogging I won’t have to pull a similar stunt. LOL
Author
I’ve got nothing against someone who genuinely likes to learn about and spend time on investing; that person should simply acknowledge that the likelihood that they will persistently outperform the market is low, and invest accordingly.
Perhaps an Evil Knievel-type jump across the waterfalls on your property will draw even greater crowds to your site!
If you want to manipulate your Nucleus Accumbens heroine is much more efficient than investing or shark jumping. If you want a product to provide for you when you stop working purchasing a portfolio is the ticket. Probably best not to confuse the two else you’ll start “aww shucking” like Warren Buffet. You ain’t no Warren Buffet because you own a 2 fund.
Fonzi sells reverse mortgages on TV and Richie went bald.
Author
Potsie went on to write and direct for Melrose Place and Beverly Hills 90210, and Potsie’s uncle was the Dr. Heimlich who developed his namesake maneuver for choking. Ralph Malph toured last year with a swing band playing 1950s standards. Both (along with Joanie and Mrs. Cunningham) sued CBS for not getting a cut of the merchandising profit from Happy Days, and settled for $65k apiece.
Richie will forever hold a place in my heart, not for his directing, but for helping birth Arrested Development, which kept the wife and I laughing during her first pregnancy.
It’s interesting how many people think they can beat the market . And others feel like they want more control over their investments. There is a risk of trying to “over-optimize” to the point where it’s no longer efficient to do so, which often leads to the irony of making the result less optimal. Investing definitely falls in this category. On average and over time, plain and simple is the most optimal and efficient 🙂
Author
DMF,
There is a subset of FI folks who are micromanagers using FI as camouflage by rebranding themselves as optimizers. Bernstein notes the optimal frequency to rebalance is every 1-3 years. With finances, as with so many other areas of life, you reach a point of diminishing returns…
Thanks for stopping by, my friend.
CD