Ep 375 - The NDO 10 Rules of Investing

Thank you for joining me today. It's Brian Gubernick, and welcome to the No Days Off podcast, where we believe that every single day brings a new opportunity to get better. Today we're going to be focused on getting better at investing. Let's talk a little bit about money. I want to go through the No Days Off rules, the 10 rules for investing. I want you to write these down or come back to this and, and, and listen to it once again and memorize them, whatever it takes. I want you thinking about these 10 basic rules that I've developed over the years through personal experience, through studying others, from taking action and winning, as well as taking action and failing. But just simply putting into practice or taking into consideration those things that have served me well and I think would serve all of you in the No Days Off Nation with respect to your, your wealth-building journey. Okay, so 10 rules on investing. Number 1, no surprise here, play the long game. As our, our buddy Warren Buffett likes to say, our favorite holding period for an investment, our favorite holding period is forever. So when you invest in real estate or you invest in the stock market, Recognize that it's designed to transfer money from the active to the patient. Think about that. In the spirit of playing the long game, the stock market, the real estate game, it's designed to transfer money from those that are active to those that are patient. What I'm trying to say is buying and selling, being short-sighted, not being patient with respect to playing the long game, might be a way to make a quick buck here and there, but real wealth is created by remaining patient, allowing the active to transfer money to us. So number 1, play the long game. Number 2, along those same lines, ignore short-term noise. True value in an investment is recognized over time. There will be ups, there will be downs. You will read the paper on a Monday and it's going to tell you the market's going to plummet. And 2 weeks later, you're going to read how the S&P was up another 1% over the course of the month. That's real news as of right now. 3, 4 weeks ago, everyone thought the market was doomed and things were turning. Then at the conclusion of the month, we had one of the greatest rises in the market in the S&P that we've had in recent history. Number 3, this is an interesting one. If you're not a bit worried about your investments, You may actually not be risking enough. I know that sounds a little crazy, but if you're not worried a little bit about your investments, you may not have enough on the line. You need to have enough money out there invested so that it's actually a concern to you. I believe this to be important. I believe it to be a rule because you are more likely to make a right decision when you're emotionally involved because of the size of the investment. You're also more likely to watch the investment more carefully. So bottom line, the third rule: have enough in the game such that you care. And by caring, you will be a little bit more involved, you'll make a better decision as a result, and you'll watch that investment more carefully. Number 4: always take your profit too soon. I would use air quotes around that, too soon. Always take your profit too soon. You ever hear somebody say, oh man, I wish I would have left that money in there, I pulled money off the table too soon? Well, for specific types of investments, I'm not talking about long-term stock in the Warren Buffett style, but specific types of investments, it's never a bad thing to take your money off the table even though in the long term it may appear to have been too soon in that maybe something continued to appreciate or thrive. I'd rather stack a W. It may not be as big a win as I thought it could be in hindsight, but I'd rather stack that W, take some chips off the table, as opposed to thinking I sold too late. Number 5, distrust anyone who claims to predict the future since all financial outcomes are loaded with uncertainty. Distrust anyone. Be a skeptic. A healthy skeptic, but be a skeptic because predicting the future is, is kind of a fool's game when it comes to investment. Sure, you can underwrite things and come up with the best possible guess based on all of the variables at that very moment, but anybody that claims with absolute certainty that they could predict the future is lying to you because you just can't. You just can't. And the numbers over the course of history of financial planners, of real estate speculators would indicate that, yeah, while they may win sometimes, they also lose. Number 6: never fall in love with an investment. And I would include your personal resonance. Never fall in love with an investment. Why? Because as you become too emotionally invested into an— in an investment, it makes it more difficult to make a smart decision around whether to stay or go. Exit or double down. If you become emotionally tied to that investment, if you fall in love with it, your judgment is clouded. Number 7: Luck is the most powerful single factor in investment success. So I believe that if you know that luck is the most powerful single factor, if you believe that, then you need to position your investments to take advantage of this fact. What do I mean by position your investments? If luck— if we need luck to be successful in investment, and anybody that's been investing for a while can tell you luck certainly plays a role, uh, an incredible role in success— position your investments to take advantage of this. What do I mean? You buy something that's conservative or stable or dependable and you hold it for an extended period of time, luck is bound to show up. If you invest in a specific sector that's more predictable or has a competitive advantage, or better yet, has a really stable management team, a management team that's performed over the course of time, luck magically starts to show up. Luck's the most powerful single factor in investment success. Recognize this. Ask yourself, how much luck do I actually need to be successful in my, my investment path, on my investment path? And position your investments to take advantage of this. A lot of that just has to do with holding for an extended period, if not indefinitely. Number 8, in stocks, avoid unnecessary risks by investing in stable, reputable companies with sound management and a competitive advantage. In real estate, avoid unnecessary risks by investing in properties and areas that you know and that you understand. So number A, it's all about avoiding unnecessary risks. Avoiding unforced errors would be, would be a different way of saying that. How do you avoid unforced errors? Invest in stable, reputable companies. Or invest in real estate that you know, areas that you know. In other words, don't gamble. Be very calculated in your approach based on your knowledge and the information available to you. Number 9 in the 10 rules for investing. Number 9, optimism means expecting the best, but confidence comes from knowing how you will handle the worst. So always ask yourself, what is the worst possible thing that can happen in this situation? And then plan accordingly. So number 9 is black-hatting what it is you're about to invest in. What's the worst possible thing that can happen in this situation? Based on that, how would I react? Can I handle this reaction? For example, if you invest in, in a stock that might be a little riskier, you run the risk of losing all of your money that's invested in that particular stock. So if that's the worst possible thing that can happen, I would ask you, can you, can you stomach losing that money? Would it put your family in jeopardy, your life in peril? If the answer is yes, well, maybe this is not the right investment for you. Optimism means expecting the best, but confidence comes from knowing how you'll handle the worst. And number 10, the last one in the investing rules for the No Days Off Investor: the greater the investment options available to you, the higher the likelihood of making a wise investment. This is a theme for me. I've talked about it on many an episode, not just with respect to investment, but when it comes to hiring or just decision-making in general. The more options available to you, the higher the likelihood that you'll make a wise investment. Said differently, if you only have one investment that's sitting in front of you, you will naturally do everything possible to make that investment look like a good one. But if you had 4, 5, 6, 10 different things to consider, and you can underwrite them against one another, you are more likely to make a wise investment decision. So, I ran through the list, the 10 rules on investing for the No Days Off Nation. Go back and listen to this or listen to it again, write them down, stare at them for a while. Which of these rules are you honoring right now and how is that serving you? More importantly, which of these rules may you be violating and putting yourself at risk or have you already experienced some challenges because you now see maybe you violated that particular rule. So, take a listen to these 10 rules again. Make sure you start implementing these in your world if you've not already done so. And make sure, I would say, to share these with others. One of the best ways to cement this knowledge in your mind is to turn around and share it or teach it to those that mean something to you, that are important to you. So, make sure you're teaching these 10 rules as well. That's all I have for you today, the No Days Off Podcast. Thank you so much for listening, and remember, every single day brings a new opportunity to get better. So let's get after it.