My Life is an Investment Portfolio.
Let me tell you how.
It is currently 11:03pm on May 26th here in downtown Toronto. I’m sitting out on my balcony in front of City Hall in the middle of TO’s financial district, thinking intently about the metaphor I’m about to delve into.
The economy fascinates me. Wall Street fascinates me. It’s so volatile that I can’t help but be sucked into the sensationalist narrative. The state of today’s global financial affairs is changing as drastically as Canadian weather, and that’s saying something. As a novice learner of how the world’s stock markets function, I have come to a conclusion that explains my fascination.
My life is an investment portfolio.
It starts when we open up our first investment account with a limited amount of investable capital. In life, some affectionately call it “the hand you were dealt”. To me, this start up capital represents our start in life. Where we live, our economic situation, our family relationships. We only have so much when we start, so opening this account essentially births us into the world of the tumultuous market. Also known as planet earth. Also known as humanity.
What’s the primary purpose of putting $500 into an investment account? To turn it into $500 million, no? For some of us, even $500,000 would cut it. How is that achieved? By making a set of calculated decisions that involve risk. As we start to grow and become sentient, we realize that our choices have consequences. The most classic example I think of is putting your hand on a hot stove cause you don’t know any better. When you get burned, you realize that’s not something you want to feel again and you make a different choice next time.
If you’re risk averse (which can often be a result of societal conditioning), your investment portfolio is going to be conservative. You’ll invest in stocks (and most likely bonds if we’re getting technical) that will provide guaranteed income and their values will see long term incremental increase. This is a strategy that almost guarantees you security, despite the fact that it comes with the opportunity cost of making a fortune off of well-considered risky investments. You pay for that perceived stability.
With the hand we were dealt at birth, we discovered this thing called cause and effect. When first striking out with our start up capital, we had no clue what we were doing. As we got burned in life we naturally started to look to other people for guidance and advice. These are the brokers and financial advisors of our lives. Based on their expertise and past experiences, we put some level of trust in them to know when to buy and sell, when to get into the market, and when to run for the hills. This guidance was based on their subjective analysis of market trends, of course. Sadly, not all of them had our best interests at heart. We learned that the hard way.
Over time we got the hang of things. We started understanding that our opinions, intuition, and instincts are separate from those of our loved ones and no matter how much we loved and trusted them, we started to override them in the pursuit of our own happiness and success. We started to think we knew what was best. For some that was done in defiance, others in passivity. Some people sold off consistently high-performing stocks to prove to their family that they didn’t need secure assets to make it. Some stayed in the game only to see their portfolio tumble due to bad advice given to them by their advisors, while internally knowing better the whole time. In any case, loss became a part of life. For a lot of us, that was not an easy pill to swallow.
Every morning when we open our eyes, that’s the opening bell of our stock exchange. We have the value of our current assets from the previous day and we have a volatile market that has more options than any of us can count. It’s overwhelming. It’s saturated with flashing lights, numbers, trends, and information we don’t always understand. We have advisors waiting in the wings to influence our choices and we have our own judgement to contend with as we see the depreciating value of some of our investments. Stay in or step out. Every choice, every decision, is a decision to buy or sell. A stock called pride. A stock called love. A stock called fear. A stock called growth. All subject to market influence.
No wonder people are professional escapists.
We live hilarious lives. If someone presented you with an investment opportunity and proceeded to show you with hard evidence that it has no growth potential, would you take it? When put like this, the answer may seem obvious. You guessed it though, we’re taking opportunities like these all the time and it’s costing us the benefits of other worthwhile investments. Say for example, our health.
Now, when we have $20 on the line we’re less likely to pay too much attention if that investment goes south. It’s a relatively easily recoverable loss. When we have $20,000 on the line, we’re most likely going to be a little bit more attentive and adamant on seeing positive results. The problem I’m seeing? People putting $0.50 on the line and expecting a $50k return with no research into market conditions and success potential. To make matters worse? They have no desire to undertake uncertainty. I say this with love, but what the actual heck are you doing.
People who put protectionist policies in place around their heart do it so that they can invest a minimal amount and feel very little loss if there is no return. I know I’m guilty of that. What gets sidelined with that mentality is the fact that the same opportunity could have been highly profitable if we rearranged our portfolio to accommodate risk, consulted credible sources to substantiate our choice, and fought for it because we believed in its value. See when we’re that fearful of incurring loss, we operate in the scarcity mentality. The same mentality that dictates that someone has to lose in order for you to win. This opposed to the abundance mentality, which dictates that there’s enough for everyone. I shamelessly blame the capitalist system for the former.
When we’re mindlessly making choices, we have no perception of the reality of our portfolio. It’s there in our account but we’re not logging in to assess our stats. At every growth stage of the economic system called life, we’re going to incur loss. Heck, you incur loss every time you put deep fried food in your mouth (RIP cholesterol), but that doesn’t stop you does it? If you’re not down to accept the significant loss that comes part and parcel with success, that’s fine by me if you want your tombstone to read “died with potential”.
For God’s sake, look at Warren Buffett kicking himself for Berkshire Hathaway not buying Google. The man’s net worth is 74.1 billion USD and he’s still lamenting the opportunity cost. If we’re all walking around claiming that our goal is growth, claiming that we want to turn $50 into $500M, why aren’t we investing like it? Why aren’t we taking the time to analyze risks, taking them, and putting forward a substantial amount of capital to do so? What is so terrifying about heartbreak that we’re closing ourselves off to love and trading it in for surface-level, short-term physical pleasure?
The combination of unawareness and fear of loss is a lethal one. When we go to invest and we’ve made a conscious choice to put a significant amount of funds on the line, we’ll naturally take care of it. We’ll nurture it. We’ll actively watch and maintain contact, because it’s a representation of our intention in the matter. Advisors will tell us one thing, our fathers another, and our intuition might chime in too. Regardless of ROI, at the end of the day, you’re the one who will face the repercussions of your choices. Whether your portfolio becomes a knock-out contender or disappears entirely is of your doing.
We have everything to gain. Yes, us. And it starts with becoming aware of our fund allocation as it currently stands. If we find we’ve bought up empty stocks, real talk, divest immediately. With every attempt to control the uncontrollable, we’re hemorrhaging precious capital. It’s also in our best interest to know when someone’s trying to pass off something of no value as profitable. Stay woke, as the kids these days say.
In essence, it’s a matter of awareness. Once we become aware that we’ve been investing significant intention and energy into things that do not serve us, we can come to the realization that we are mortal. That every second we live and breathe, we’re not getting it back. For some, the realization will hit like a ton of bricks as we realize that we physically do not have the time to waste on the pursuit of stupid things. That’s cause someone can call time on our life at any given moment.
So if we look at our current assets in play and the investable capital we may have stored away, what can we invest in that serves our highest good? How much risk can we actually take on? How can we see investments not as a way to mitigate inevitable failure, but as a viable chance to become wealthy?
I can’t tell you how for sure, but I can tell you it’ll take work, vigilance, top of the line analytical skills, strength, and a huge amount of love. And I’m up for it.