Your Philosophy Matters!!

As many of you may know I am a huge Green Bay Packer fan. Well the pack is going thru some tough times. Many of the Packer stars have been injured. Offensive line, cornerback, linebacker, safety, defensive line….But most notably the Packers have lost Aaron Rodgers possibly for the rest of the season.

They will regroup and Coach McCarthy will emphasize getting back to their plan. What makes them a great team needs to be reinforced to the players and staff. It requires discipline in both the good times as well as the bad times.

Many fans are calling for the signing of an emergency quarterback. The names Kaepernick (never), Romo, even Favre have been mentioned. What fans seem to forget is it takes time for any player to learn the current system.

There are different philosophies around the NFL. The Packers administration has their own philosophy. They as a group stick to this philosophy regardless of what the fans and the media say. When they deviate from this philosophy they probably should be replaced.

In my opinion when you change philosophies mid-stream you are giving up on what you believe. When this happens, there is no plan. You are making emotional decisions without a clear goal.

Remember when you believe in nothing you will fall for anything.

A change in philosophy would require a change in administration. That would mean Ted Thomson goes, Mark Murphy goes, followed by Mike McCarthy.

For now, we will follow the current administration and live with their decisions. Like it or not.

Investors have two main philosophies to choose from. One is that free markets work, and the other free markets fail.

If you believe the free market fail:

  • The market fails to price goods and services efficiently.
    It is possible for some individuals to identify in advance which prices are inaccurate.
  • Underpriced or overvalued markets can be forecasted or predicted.
  • Managers seek to increase returns and avoid losses by taking advantage of stock or market mispricing.
  • People with this view use traditional investment approaches.

If you believe the free markets work:

  • Free Market is best determinant of market prices based on Supply and Demand.
  • All available information is factored into the current price.
  • Only new and unknowable information and events change pricing.
  • The randomness of the market makes it impossible for any individual or entity to consistently predict market movements and capture additional returns unrelated to risk.
  • People with this view would utilize free market investment strategies

In my opinion, investors would be better served by following the free markets work philosophy.

Like the Packers we need to ignore the media hype and focus on their long-term goals.

Also like the Packers they need to understand what the process is and believe in it. Remember investors do not have to know everything about investing to succeed but they do need to know the right things.

To succeed long term in investing find an investor coach/fiduciary adviser that you believe in and learn whatever you can.

Then you must own equities…globally diversify…rebalance. And repeat until you die.

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