George Sisti, Certified Financial Planner®

I know he will always include a couple of great lessons and debunk something that is being pushed by Wall Street and/or the media. I like that George is anti-Wall Street and reminds us how we should act in our own best interest. Also, he is not accepting any new clients but continues to share his knowledge and wisdom with all investors.

Here is an excerpt from George’s latest newsletter, “Summer musings about investing,” in which he considers inflation, recession and human nature:

There’s nothing new in investing, which would be good news if not for the fact that few investors know anything about stock market history. The flaws in our human nature that create manias and bubbles will always be with us.

Many investors have treated crypto as if it wasn’t a classic mania – irrational pricing fueled by debt, social media hype and a host of greater fools eager to jump on the gravy train. Speculative manias always end badly. Almost no one gets in early and gets out near the top because the top is where things are too good to leave, and speculators’ hubris is at its peak.

You’re better off appearing foolish for not seeing that “this time it’s different” and not owning the latest fad investment than to join the crowd, be proven a fool and sufferer severe loss. One of the common sermons I’ve heard from zealots is that cryptocurrencies are a hedge against inflation. 2022 provided a prime opportunity for this hedge to play out, but the most popular cryptocurrency, bitcoin, has turned $1 into 52 cents year-to-date through July 30th . 

The worst thing about foolish investment ideas is that they can look brilliant for extended periods of time. But it is foolish to ignore common sense, the fundamental realities of math, logic, business, finance, and economics in pursuit of a speculative return. Foolish investment ideas can seem brilliant as long as new “fools” join the party. Wealth management firms jump on the bandwagon because fad investments are easy to sell and come with high fees. Once all the fools are on board, the entry door and overhead bins have been closed, and the jetway has been pulled away, the only thing left is the inevitable crash and destruction of capital. 

The financial media firms don’t care if they’re giving you worthwhile guidance or leading you astray. And why should they? They are never held accountable for the consequences of any foolish ideas that they promote. The function of the financial media is to generate more eyeballs, ears and clicks to increase their advertising revenue. And nothing attracts attention better than fear mongering. 

AND THIS:  The more you follow and try to make sense of the stock market’s day-to-day activity, the more it will drive you crazy. There’s no way to avoid bear markets; you must learn to endure and survive the years in which your portfolio loses money. Our emotions are unreliable when it comes to investing. That’s why you should think twice before abandoning a prudent investment strategy in a bear market. Investing is about attaining your financial goals, not increasing your net worth every year, or becoming as rich as possible. The best way to manage your portfolio is to focus on your goals, anchor your portfolio to your financial plan, and stick to that plan. Nothing goes up forever and nothing goes down forever. Thus, when possible, invest in mean-reversion – the one ongoing constant in investing. 

You can access this month’s newsletter by George here. Feel free to forward it to anyone who you think would be interested in receiving it, and subscribe for future issues.