Two types of "Lone Ranger" Investor

Pretty much everyone of my generation grew up familiar with The Lone Ranger. As I write this, I’m struck by the idea that my own kids may have never watched this show. Perhaps a priority realignment is in order. Well, I thought of this concept recently when thinking of two types of investors that are out there roaming the wilds as “Lone Rangers.” Those two investors are what I’ll call the “do-it-yourselfer” and the “underserved investor.” Both have similarities which I’m going to devote this week’s article towards.

The “Do-it-yourselfer” is someone who has done well for themselves. As a general profile they are the disciplined type. In my experience, they are the quiet, confident types. They are that person who has risen before dawn, worked out, said no to that extra piece of pie, and go to bed on time. They are eternal optimists in that they always believe there is more to accomplish in a day than there is physical time. Most of the population sees these folks and is exhausted at the thought of keeping up with them. They are the person who is trusted. And because they have had past career success, they assume they will be successful as an investor. Just like the successful football player that tries his hand at coaching, they soon find that different crafts require different strengths and skill sets. You see, investing for the long term is easier when you are focused on a career. This is because the scarcity of time forces one to choose an investment path and furthermore prevents one from checking and second guessing that path every ten seconds. The career in a way forces a sense of decisiveness that is underappreciated. Additionally, the “accumulation phase of life” is way different than the “income distribution” phase of life. The “Do-it-yourselfer” has the benefit of dollar cost averaging into a wide array of market conditions which benefits them over multiple decades.

When thinking of how to describe the “income distribution” phase of life I was struggling with an analogy to describe it…and then it came to me: A controlled burn. Growing up in a rural area, occasionally we would have a neighbor who wanted to burn off a section of ground for various reasons. The goal was to keep it slow, steady and under control without letting it get out of hand. In certain sections of the country, I think they do this with underbrush to ensure that excess vegetation doesn’t build up over time and cause a catastrophic event down the road.

The income distribution phase of life is a controlled burn of sorts for an investor’s portfolio. Income is no longer coming in and must be produced by the portfolio. The more steady and controlled this process is, the better the results. However, just like a controlled burn you have to take the conditions around you into consideration. Landscape, weather, wind direction all play a part in your plan. Perhaps even factors you are not aware of become important. In the same way the “Do-it-Yourself” investor in the distribution phase of life, has more time to focus on the details and the more they focus on the portfolio the more they are tempted to make changes. The more changes they make the more information they are tempted to find the market place and the more information they find the more changes they are tempted to make. Frankly, it is a terrible place to be because of the cascade of poor information in our increasingly digital age. Man has never been liberated from has passions / sins and technology has only made that flaw “more efficient.” ?

The other investor who is a “Lone Ranger” is the “Underserved Investor.” This person is partnered with an advisor, but the relationship is built on anything but trust and proactivity. Both parties in this relationship are unhappy but they have made peace with their lack of compatibility because the fear of the unknowns that come from forging a new relationship are just too great. This arrangement reminds me of some advice given to me by a former boss. He said that he knew it was the right time to fire somebody when he saw their name flash across his phone, and he had to suppress the urge to curse. Similarly, neither the client and the advisor in the “underserved category” look forward to seeing each other. It’s not as if they jump out of bed thinking they are lucky to know each other. Rather they tolerate each other if they think of each other at all. They are not teammates…rather, often, they are competitors.

This can come from a multitude of factors. It could be that trust was never won. It could be that the advisor was “gifted” to the client by their parents or a previous advisor who retired. Because neither of the parties in this awkward union trust the other fully, they both take on a type of stress. The client takes on the stress of backseat driving because they don’t believe their advisor is going to be proactive enough to fully look out for their best interest. The advisor takes on the stress of trying to overcome this lack of trust and finds the need to exert effort to talk them out of often unhelpful ideas. The question of when this “information two-step” ends revolves around who secures their dignity first.

So to better understand my feeling for both these Lone Rangers I’ll share my thoughts, which come from wait for it: Ranger School. Cheesy, Yes. But follow me here. The reason I value my time at Ranger School isn’t because of the techniques and procedures I learned and no, there really isn’t anything incredibly excellent about executing military operations on little sleep and food all while, wet, cold/hot and often injured. Rather, the true value comes from the self-knowledge that experience gives you. For myself, I didn’t like what I saw. Turns out I struggle in those situations. But the secret is, everyone else is as well! How you love your neighbor is outsourcing your weak points to those around you who can improve them for you and then focusing on what you are good at with all your might. This trust in others insulates you against needless mistakes that you would have been tempted to make. You learn quickly that the team around you is not your own worst enemy, but rather you…you are in fact your own worst enemy. The people that succeed in that environment are those who humbly depend on a team of peers to make them better and build them up. The most dangerous thing you could do is trust yourself with every detail and make yourself the single point of failure.

As I wrap up this week’s letter, I hope I haven’t described you or someone you care about. If I have it’s time to take action. You deserve the confidence that comes from knowing someone else is looking out for your best interest. You deserve family office style care that is proactively looking at your situation from a wholistic perspective. Have a great week and please reach out as you have questions. As always know that I’m wishing you continued Truth, Beauty and Goodness on the road ahead.

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