Stop FOMO Investing. Do this instead...

Well, well, well. Welcome back to the channel. My name is Bridger Pennington. Today we're going to be talking about how a lot of us in investing get this FOMO or this fear of, oh man, I should have bought Bitcoin at $800 or $1,000 or $2,000. I had a buddy that told me to get in and I didn't get in and oh man, my life's ruined. It's over forever. Blah, blah, blah. And guess what? I've had the same thing. I'm going to share with you guys today my criteria that I use to look back at my investing career and what decisions to use today so that I don't have FOMO. I call this the anti-FOMO criteria. This is a way that you can live with yourself, sleep well at night, and know that while you're investing, yeah, you're gonna miss. You're gonna miss a lot. You're probably gonna miss 99% of the good deals that pass, but still you can live with yourself and be very happy with your investing career. So with that, let's dive into it. Now Bitcoin is a great example here. A lot of us have heard about Bitcoin for a while and still continue to hear about Bitcoin. And actually, a majority of still Americans and investors do not hold any cryptocurrencies, any Bitcoin after all of the headlines and everything you see. But I have friends literally that have a, I mean, are for a while suicidal because they had a friend, whatever, they could have gotten into Bitcoin at $800 or $3,000 or even heaven forbid it was $20,000 when they knew they should have done it. But man, they did not buy. So number one, rest easy. We can't do anything about the past. We only can make decisions now and look forward to the future. So let's learn from these mistakes and go forward. And actually throughout my investing career, I've actually, I don't live with a lot of FOMO really at all inside the space. And this green marker freaking sucks, so I'm gonna get rid of this. Alright, so the first thing in my criteria, when I look back, what was my current financial situation? sitch or situation. Okay, I put sitches short. When that opportunity was brought before you, were you in a financial situation to actually take the risk? What have you done before that to prepare yourself when an opportunity comes that you can take that opportunity? And actually, a story I'll share with you from one of my mentors. They were starting a business and this business ended up blowing up. Multi-billion-dollar business, incredible. When they were starting, he had a few partners and they invited one of his friends to be a partner with him. And this partner thought about it for a month or two. He said, I don't know, I gotta leave my job. They said, no, come work with us. It'd be so fun. It'd be He just didn't, I don't know, I don't wanna take the risk. He said no, he passed. And 10 years later, that company's, you know, huge multi-billion-dollar company and they meet up. And my mentor's sitting there with his friend. His friend is just kicking himself. He's like, I can't believe I passed. It was the dumbest mistake of my life. And my mentor says to him, he says, no. He goes, you couldn't make a decision. He goes, what do you mean? And he goes, no, dude, you had already tied yourself in a place that you could not take that opportunity. He goes, what are you talking about? He goes, at that time, your current financial situation, you had 2 cars, you had a BMW in the driveway, and you had a big— and then you had a Mercedes for your wife because she's got to have a Mercedes, and you had a big house with a big mortgage payment, and you were paying bills and things. You had to keep your job. Yeah, you were living a nice lifestyle, but you did not have the availability to not get paid for 12 months or 18 months, which we were projecting we wouldn't get a paycheck for 12 to 18 months. Because of your big house and your Mercedes and BMW, you could not do that. And you took your family to Hawaii twice that year. And the guy said, yeah, actually, you're kind of right, aren't you? Don't have this regret that you missed out. He goes, dude, you were not in the situation to even make that decision. So number one, when we look back and we're looking forward as well, we can only make decisions today. Make sure that you are in a stable financial situation that you can take opportunity when it comes. One of my favorite quotes from Charlie Munger, he's famous partner of Warren Buffett, says, you should always keep about $10 million in your checking account just in case a good opportunity comes up. Now, not all of us have $10 million to keep in our checking account, but I think it's a good theory for what we can do. Whether that $10 million is $100 grand or $50 grand or $25 grand or $10 grand, you should have a decent chunk of change in the side. And I know people, oh my gosh, inflation is going to eat up your dollars. But when everything goes south, guess what you want? You want some dollars that you can use to take opportunity when it spits on your feet. Now, another way I like to look at this is this is actually something from Dan Fleischman. I'm going to give him a shout out. Dan Fleischman did a great job teaching me this. I actually really like this. I've heard other things like it, but I like the way He did this. He calls it his 40/40/20 rule. Now you can tweak these numbers, but I like the concept. He goes, when I think about my entire portfolio, 40% goes to very, very boring traditional instruments. This is your very safe criteria for whatever you think, you know, very, very safe. This is your nest egg that you keep for a long time. Very boring, very not entertaining investments here. That's your first 40%. Your next 40% Goes to a mid-tier of risk, right? This could be, I would put real estate in this bucket. You could put some funds. You could put the S&P in this bucket, right? Other things here is your mid-tier 40 risk. Still not as fun. This is still long-term, you know, but mid-tier here. So 80% of your investments are going to be in these boring to mid-tier risks. Now, this is not financial advice. Take, you know, do whatever you want. But then he says this last piece, this last 20 piece, is my shot at glory, he says. This is where he says, you know what? Yeah, I've already got the 80 in place here. The last 20, I'm going to have my shot at glory. Yeah, some of these aren't going to work out, probably a majority, but if they do work out, these are going to be life-changing investments. These are literally generational. If a couple of these work out, it absolutely changes the game for me. So, he makes sure anything that goes into this bucket, it's not like, oh, I'm gonna get a nice 8% to 10% return. No, he wants A huge return out of this high-risk portfolio. So this 40/40/20 rule, I actually really like that. And actually, when I think about my current situation, it follows that pretty well. So when you're thinking about investing and you're saying, man, I got so much FOMO. I should have bought that NFT or that Bitcoin or whatever that— I should invest in that company. Look back. Number 1, were you in a good financial situation that you could invest and take risk? Number 2, had you done this? Do you have that 40% taken care of? Do you have the other 40% mid-tier? Taken care of, where your 80% is already taken care of and the remaining 20%, you can take a shot at glory, right? You can invest in that startup or invest in Bitcoin. And if I look back at 2017 and I should have bought Bitcoin or 2016, I should have bought Bitcoin at this certain price point, I look at myself and say, well, no, I hadn't figured this out. I didn't have this part. And some people just only take shots at glory and those people tend to bust, right? if they don't set their base below them. Now, number 2, what I use is Jeff Bezos' regret minimization theory. I love this theory. I love making decisions on this theory. Again, this is for my personal portfolio. This is not for my fund. My fund follows strict guidelines and criteria. This is for me personally, just in general. But this is a great way to look at it. Essentially, the theory is if I have 2 decisions, what will I regret the least in 10 years? So, if I had a decision between a safe investment and a risky investment, if in 10 years, I'm gonna regret missing out on that super risky investment? Let's say it went to, you know, it 100x'd over 10 years. In 10 years, am I gonna regret that more than if I put my money into the risky investment and I lost it all, right? Versus I could have put it in this, you know, relatively safe investment and maybe I, you know, 2x'd over 10 years, but I probably didn't lose it as much. So you're looking at a decision, 10 years from now, I'm going to look back and say, man, am I going to regret, ah man, I should have just kept and been safe with my money and now I've got to keep working or whatever. I got to get back to work. I got to get another job because I lost all this money. Or am I going to regret more that, oh, that moonshotted and I missed out on it? Interesting way to look at a decision. Actually, Jeff Bezos uses this apparently in a lot of his decision-making. And also those answers help determine what type of investor are you? Are you closer to the gambler investor or are you closer to the, Hey, long-term generational wealth type of investor. Now personally, I want to get rich once in my life. I have a number of mentors that have had to get rich multiple times in their life because they will get a decent amount of income. They're excited. And what they do is they start to spend all of their money and they invest only into this 20 very risky bucket. And because of that, when a market cycles, They lose all their money. But guess what? They're hustlers and they got to get back to work. They start another company and then they kill it again. And guess what? A lot of times they lose it again and they just love that game. Personally, I don't love that. I want to get rich once and stay rich forever. Right now, I'm building my companies, building all of our stuff. We've done decently well. And I, when I think about my risk profile, I would rather miss out on a moonshot opportunity and maintain and grow my wealth over the long game. I have patience as an investor. I'm fine to wait. And actually, I need to be drug more into probably more risky. I spend most of my money in this, both these 40 buckets, and I do less in this 20. But recently I've done a little bit more of the 20 buckets over here. But again, I very much like this regret minimization theory. All right. So number 1, we talked about the current financial sitch. Number 2, regret minimization theory and the 40/40/20 rule. Number 3 is the abundance mindset. Again, to solve the anti-FOMO criteria, to help me live with myself through investing. The abundance mindset is this. There is a lot of resources and money on this planet. You are not going to capture and get every single good investment that comes across your desk forever. No one's batting 1,000. And if you have a friend or a brother-in-law or a dad or an uncle or a nephew that's outbatting you, that's okay. See, I have some friends that love to spend their mental energy on what they missed out on. And it eats them up inside. And sometimes it draws them to lawsuits to sue a friend just because, hey, 10 years ago, that idea was mine and you took— And it just is a hard way to live life. There's a lot of money in this world. And literally, if I make a dollar, I'm not taking it from someone else. They are creating hundreds and hundreds of millions of dollars a day. Now, I know some of you watching this don't believe me, but there is plenty of money to go around for everybody. And if you don't believe that, you need to rewire your brain because there truly is plenty. I'm not kidding. Plenty of money to go around. A billionaire, Could give away $71,000 a day, every day. Think about that. Giving away $71,000 a day, every single day. Almost $500,000 a week. That billionaire could do that every day of his life and not run out of money for 31 years. That's how much money $1 billion is. Think about that. If you had $1 billion, you could give away $71,000 a day. Every single day to somebody for 31 years and not run out of money. So, if you miss out on a deal, that's okay. If your friend hits it big, awesome. Cheer them on. There's plenty of people and followers and money to go around. There are so many little niches, especially in this day and age. We live in too great of a time of opportunity to spend your time thinking about what you don't have, and if you follow and you stay in a good financial situation, again, I believe wealth Is the ratio between how much you make and how much you spend. If you make 100 times what you spend, your ratio would be 100 to 1. You are infinitely wealthy. But if your ratio is, hey, I make, you know, 2 to 1, I spend about half all I get, you're going to probably struggle throughout life. That's what wealth is. So being in a good current financial situation. Following, I like the 40/40/20 rule. Understanding when I'm investing in something, what bucket is this thing going into? Number 2, regret minimization theory. What will I regret the least in 10 years? Number three, having an abundance mindset. You're going to miss out on deals. It's okay. Your friends are going to hit it big and then probably lose it big. And that's okay. We're all playing the infinite game. This is a long game we're playing. It's called life. And just because you win the money game doesn't mean you won life. So hopefully that helps. That's my anti FOMO criteria. If you like this channel, please subscribe and like and please comment below your thoughts on this. I'd love to hear you guys think. And with that, I will see you guys on the next episode.