Regardless of what you call them – principles, philosophies, core values – my best decisions are made by following a North Star.
Living by a set of core principles allows you to make better decisions, faster.
For instance, our investment philosophy is simple:
Always be invested in a diversified portfolio of stocks.
Investing by that principle frees my mind to easily make smart decisions through well-grooved heuristics.
So there was never a single, solitary moment this year where I considered selling or not recommending being fully invested.
It doesn’t mean that the question “should we sell?” isn’t wired into the decision-making circuitry.
It’s still in there, but I pass through that question so quickly I don’t even notice it.
That’s because down markets are nothing new.
But when something new comes along, then I’ll leverage my principles to make smart decisions with the new information.
Not including Wall Street snake oil, a new investment hasn’t come along since ETF’s took off 20 years ago.
Crypto is not a stock, so it probably has no place in our investment strategy. But it is new, so it warrants a deeper dive.
Why do we only invest in stocks? Because stocks are the only investment that leverages the evolution of the human race.
The price of a stock is a direct reflection of the value added by the goods and services that company provides. Companies literally “produce” value for the world.
That’s the litmus test for adding investments. So does crypto systematically add value to the world?
Maybe. Maybe not. I’ll let you know when I finish digging.
But the point is with a North Star, I can objectively evaluate new information and make faster decisions with information I’ve seen before.
Without our North Star, I’d follow every investment fad and ebb and flow of the market.
It’s not important that your North Star is the same as mine.
The important part is that you take the time to discover yours.
