Posted June 17, 2022
By Zach Scheidt
Lesson From a Multi-Millionaire: "Don't Get Cute!"
I picked a terrible week to attend an industry conference out of town...
While the market sold off, I was ducking in and out of sessions and following the action closely on my laptop.
The conference made for some long days — and late nights covering my normal daily research.
But I can honestly say that I'm glad I was at the conference during this challenging market period.
After all, it was very informative to see how different people from various walks of life handled the situation.
Today, I want to share one of the best lessons I walked away from the conference with: one that could save you a lot of money in today's bear market.
You Don't Need All the Bells and Whistles
I felt a bit humbled sitting among the different attendees at this week's conference.
As I scanned around the room, I recognized several affluent self-made multi-millionaires. You would recognize some of their names instantly.
And others have worked very hard to keep their names out of the media (while still amassing a huge amount of wealth for themselves and their business partners).
I was also a bit overwhelmed with some of the technology that many of these traders and investors showcased.
Special computer programs that mine data and spit out fancy recommendations...
Alerts that tell you what time of day you'll have the most success...
Even top-secret "black box" programs that supposedly increase your returns (without telling you how).
After a couple of these flashy presentations, I started to wonder if my investment approach was becoming outdated!
That's when one of the successful corporate leaders took the stage and put everything into context.
"Don't get cute," he said before pausing for effect.
Aaron then went through his philosophy of success for building a business, investing, and his life overall!
He kept circling back to fundamentals, treating people right, working hard, doing the necessary research, and making smart decisions.
No flash-bang technology… no artificial intelligence… no "black box."
Sure, those things can sometimes accentuate your success — but only if you already have the fundamentals down pat.
Keeping It Simple in a Turbulent Market
Now more than ever, it's important not to get "cute" with your investments. Sure, that's easier said than done.
When the market drops 700 — or 900 or 500 — points in a day, it's tempting to buy something speculative just so you can participate in a bear market rally.
And you know what? There's nothing wrong with this approach if you use proper risk management and you understand what you're doing.
But most traders who try this are simply gambling.
They're trying to get back what they lost over the last few months in one lottery ticket trade. And most of these gamblers are simply digging themselves into a deeper hole.
In a bear market, the best thing you can do for your retirement is hunker down and stick to the basics.
Buy companies that generate reliable profits…
Use any market rallies to sell stocks that don't…
Look at valuations and don't pay too much compared to the profits per share a company makes…
Keep some cash on hand…
Sit on your hands…
Only make a decision after you've thought it through…
Or do what I do, and write an explanation of why you're buying something. (I started doing this when I was at the hedge fund before anyone ever read a single word I wrote.)
You'd be amazed at how clearly you see an investment when you write out why you're buying it right now.
Above all, don't be an emotional investor. Because bear markets eat emotional investors alive!
This too shall pass. We're going to get through this period and find some great opportunities on the other side.
But for now, the best thing you can do is protect your wealth so you have something to grow when this bear market is over.
Here's to living a Rich Retirement,
Editor, Rich Retirement Letter