Am I offensive?

Offensive investing vs defensive investing

Hi ,

Let’s start this week head-on.

Are you on the offense or playing defense?

Which strategy is right for you?

Do you ever think if your investing strategy is offensive or defensive?

What about your finances and life in general?

Want to beat the markets in any condition? Learn Mixed Active Investing here.

I stumble on a lot of financial advice that is painfully defensive.

Painfully because it is portrayed as general sound advice that everyone should follow. Examples are indexing, saving more to invest more, and budgeting.

All we have to do to be financially safe is stick to a tight budget, and minimize expenses so we can maximize how much we can save each month so that we can invest more into an index fund. Then we will be fully financially safe in 40 years.

What is the guarantee though?

What if it doesn’t turn out that way and in 40 years I realize I failed?

Do I get to try again for the next 40 years? Will I even be alive by then?

The examples are very sound financial advice, I advocate for them myself in some of my writings and when asked for opinions.

But…

What I am missing in the majority of personal finance material I stumble on online and even in books, is taking the individual into account.

What if I fucking hate my job and made some bad career path choices and have too many responsibilities to pull a career stunt?

Should I suck it up for the next 40 years and hope?

What if I am 80 and kicking harder than most people in their 50s?

Should I cut down on pleasures following the advice made for everyone knowing I am already a statistical outlier?

We need to pick the right strategy based on our unique goals and current resources.

Defensive investing is aimed at wealth preservation.

Wealth preservation is for when you have accumulated enough money to generate passive income, covering your expenses. It involves focusing on assets, with very low volatility, that produce payouts in the form of yields, dividends, rent, interests, etc.

Offensive investing is aimed at growing wealth.

Growing wealth means investing actively, looking for opportunities where you can buy something and sell it at an expected later time, making a profit. Rinse and repeat. Harder, Better, Faster, Stronger.

You cannot do both at the same time as an individual investor. You can try, but you will be highly inefficient spending more time than needed to get less results than expected.

Back to the general advice out there. It usually fails at picking a side and ends up recommending that everyone simply invest in indexes. The keyword here is everyone.

Are you everyone?

Indexing is the lowest common denominator of investing. The baseline. Beginner’s starting point.

It is very sensible to do this if you know that you have a lot of time before you will need your savings and you have no investing skills and zero interest in learnings that can change your life.

It is better than nothing. You don’t really lose, but you don’t really win either.

Can you predict what you will need in 40 years?

Picture team sports.

What are your chances of winning if you never play offensively? Close to zero. It would require the opposing team to give up.

I have big dreams. I want as much freedom of choice and availability of options as possible. So I’m not going to wait 40 years of dollar cost averaging and compound interest, sprinkled with the hope that inflation doesn’t eat it up and no financial downcycle before payday.

This is why I invest actively and dedicate myself to mastering this skill. And because it is actually really fun to invest actively when you do it the right way.

I play to win. Being proactive, predicting, and executing, adapting to what the market comes up with next. Offensive investing.

Have you thought about how you invest and where you want to go with it?

Be offensive this week.

Have a good one,

Chris

Thank you for reading! :)

You can find all past letters here.