Inevitably you will have some investments perform better than others in your portfolio. A normal, human response is to seek pleasure and avoid pain or sell the underperformer and buy what has done well. But does that make investing sense?
Listen to Kevin discuss critical concepts of diversification and probability and why process matters more than outcomes. Hear an example of this being applied in professional basketball and playing probabilities in blackjack.
In sticking to a good process, good outcomes are more likely to result. In focusing on outcomes, you are more at risk of stampeding over the cliff with the uninformed herd and wrecking retirement.
Check the four-part Your Investing Process Series, mentioned in this episode:
https://www.truewealthdesign.com/your-investing-process-part-1/
https://www.truewealthdesign.com/your-investing-process-part-2/
https://www.truewealthdesign.com/your-investing-process-part-3/
https://www.truewealthdesign.com/your-investing-process-part-4/
Timestamps:
0:43 - Defining Underperforming Investments
2:12 - Is The Investment Or Asset Class Underperforming?
4:32 - Metrics To Consider When Choosing Investments
6:57 - Getting Rid Of Underperforming Stocks
8:35 - Terminal Wealth Dispersion
12:32 - People Don't Invest Rationally
14:47 - Using Probability In Your Favor
20:38 - Planning For Different Outcomes
Contact:
True Wealth Design Website: http://www.truewealthdesign.com/
Call: 855-893-7526
Schedule: http://bit.ly/calltruewealth