Lessons I've Learned

For more than 25 years, I’ve been fortunate enough to work in this business. There have been plenty of changes and investing fads that have come and gone. There have also been principles that have helped me to learn, grow, and improve, allowing me to fine-tune how I think about investing. These principles have fed into processes that have helped me stay disciplined in doing what works. Some of these lessons are:

• There’s more than one way to invest. I’ve come to embrace the idea that investing in different styles works if there is a disciplined way of going about it. Many styles work on their own. They just don’t always work at the same time. Leaning into what’s working while keeping some exposure to what isn’t working doesn’t always give us the best possible returns, but it does smooth volatility when markets gyrate between styles.
• Implementation matters. While I’ve always tried to implement better, I also give myself room to be flexible about what I’m implementing and why. It’s better to implement the right things imperfectly than to implement the wrong things perfectly.
• Price matters. Whether it’s the trend of the price or a price ratio, there’s more information in the current price of an investment than buried in financial statements. I don’t believe markets are perfectly efficient, but I do believe markets are often more efficient than we give them credit for.
• Mean reversion and momentum both work. Technically, these both make sense, but they also make sense with regard to fundamentals. Buyers may realize that there is more upside than downside and value can no longer be ignored. Mean reversion may coincide with a trend reversal and the reversing trend can use the power of both mean reversion and momentum together.
• Surround yourself with differing views and challenge the status quo. Just like not wanting to have everything in a portfolio behave the same exact way, I really think it’s helpful to ask, “What am I missing?” or “What if I’m wrong about this?” One way to underperform in the long run is to have a static model that never adapts to the changing environments.
• Be humble and honest with yourself. We all make mistakes. The question is whether we are learning from them and adapting to avoid them. Whether it’s reviewing an investment thesis to see if we got something wrong or analyzing whether we paid too much for something, there’s always more to learn. It’s hard to learn if one doesn’t have an open mind. Being too early is a mistake. So is being too late. Maybe we got the direction right, but the position size or the upside potential was incorrect. Or maybe it was too correlated with our other positions.
• Look for feedback. It could be feedback from the investment itself as portrayed in the price. It could be feedback from others who have a different point of view. Or feedback from team members. Staying in a constant feedback loop will help us to systematically learn and hopefully stay open minded.

Disclosures

Important Information

Investment advice offered through WCG Wealth Advisors, LLC, an SEC registered investment advisor. Indices are unmanaged and cannot be purchased directly by investors. Index performance is shown for illustrative purposes only and does not predict or depict the performance of any investment. Past performance does not guarantee future results.

In general, stock values fluctuate, sometimes widely, in response to activities specific to the companies as well as broad market, economic and political conditions. Stock investing involves risks, including fluctuating prices and loss of principal.

This is for educational / general purposes only, does not constitute investment, tax or legal advice and should not be relied on as such. This is not to be construed as an offer to buy or sell any financial instruments and should not be relied upon as the sole factor in making an investment decision for any individual. As with all investments there are associated inherent risks. Please obtain and review all financial material carefully before investing. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The opinions referenced are as of November 21, 2024. These comments should not be construed as recommendations but as an illustration of broader themes.

Forward-looking statements are not guarantees of future results. They involve risks, uncertainties and assumptions; there can be no assurance that actual results will not differ materially from expectations.

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional before making any investment decisions.

Publication Date: November 21, 2024

? 2024 The Wealth Consulting Group

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