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April Fools Investment Strategy

Investing Tax Planning Interesting Retirement Planning

It’s April Fools’ Day and I was planning to write an article about “The World’s Best Investment Strategy.” My plan was to try to convince you that I’ve changed my investment approach based on a blog post I just read. I’d list several wacky ways people invest hoping some readers would worry that I’ve gone mad. Then... Ha Ha, “April Fools!”   The article would end with a reminder of the core tenants of my investment philosophy. What a great idea, right?

As this idea was brewing, I got roped into my wife’s April Fools prank.  (One that went wrong.)  She sent out a note to her students’ parents supposedly checking in to see why most kids were not in school that Monday.  This note was a joke because students and teachers had the entire week off for Spring Break.  She ended the note with “We missed most everyone today and hope to see everyone tomorrow.” 

Most of the parents understand my wife’s sense of humor and they sent notes ranging from “You had me for a moment” to “Funny stuff, Mrs. Wilson.”   However, she did get a note from one mother (one that recently moved from Eastern Europe) saying “So sorry, we thought this was an off week.  I’m sending my daughter to school, but she’ll be late because I’m not home and she has a one-mile walk.”  What!?!

Panic-stricken, my wife scrambled to find a way to remedy this situation.  Over the course of an hour, there were calls, emails, and visions of newspaper headlines.  Fortunately, the ending was a good one – “April Fools to you, Mrs. Wilson!”  Yes, the mom was pranking the prankster.  Well played.

So – I will not be writing an article with any (fake) new investment approaches.  But I will share some the crazy ideas folks have in the investment world.  

The AFIS (“April Fool’s Investment Strategy”)
(or how to make a small fortune out of a large one)

Concentrate – Have a look at the richest folks in the world, most of them made all of their wealth through their holdings in one company.  Bezos, Gates, Zuckerberg, Ellison, Page, Koch, Brin and Bloomberg are great examples, right?  Let’s ignore the fact that 70% of small businesses fail within 10 years or the extensive list of investment fads that have failed miserably.   Bet big on one investment - no guts, no glory.

Trust Your Intuitions - Thousands of years of evolution have resulted in quick responses that have kept us safe from all kinds of risks.  These same intuitions can tell us the right time to buy and sell in the investment markets.   Understanding investment history or trusting professionals who have lived through tough times is only for fools.

Follow the Crowd – When an investment has worked out for your co-worker, brother-in-law or Uber driver you should take this as a clear signal to jump aboard.   If these folks are making easy money, then surely you can make even more since you are more sophisticated.  

Ignore Costs and Taxes – We always get what we pay for, right?  Some hedge fund managers charge as much as “3 and 30” (3% of assets and 30% of profits), so their investors must be making tons of money too.  Additionally, taxes are a cost of doing business (“death and taxes”) so there is no need to make sure we are delaying or minimizing them.

I can go on and on with this list, but I’ll stop here.   AGAIN – all of these areas are where folks get into financial trouble, or worse yet are financially devastated.  The average investor falls behind not because they are flakes, it’s often because they make bad behavioral decisions.  

I feel that one of the biggest benefits I provide to my clients is “investment handholding.” This benefit is where I help keep clients from running to the exits when times get scary or flying towards the flame when opportunities seem bright.  I’ve held a lot of hands over the past 22 years and am confident this has greatly benefitted clients’ wealth.  That’s no joke.

Quantifying the benefits of handholding:

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