How to go undefeated

This week I had the pleasure of appearing on The Smattering podcast. It is a great podcast even if the guys do occasionally, like this week, book subpar guests.

I encourage you to listen to the whole thing. Find it here. I’m pretty spectacular, if I’m being honest. But for today, I’m going to focus on one small piece of the conversation.

Ok, tangent over. On the podcast, we spent a little time discussing the difference between investing and sports. And how that makes “winning” in investing so much easier than winning in athletics.

As many of you might know, I have been spending a lot of my time of late in the dungeon-like gym of a small private high school. (If you enjoy this newsletter and would like to make a donation to that school as a “thanks,” please do so by clicking here. Keyword #louisanerd in the comment section.)

Nothing comes easy for a small high school when it comes to athletics. Some of our kids play four different sports. During the same season. Our football team showed up for some games where the other team had more cheerleaders than we had healthy players. But we hold our own and have even won a few trophies along the way. (Editorial note: I’m not the kind of obnoxious parent who would mention here that my kid made state this year in cross country and her team won their region in basketball, so I won’t do that.) 

There are times, sitting there watching our teams in action, where (to state the obvious) it occurs to me we would have been better off not playing a certain team. Alas, that’s not the rules of the game. If everyone only scheduled teams they will easily beat then by definition there would be no games played.

You can’t be in the league if you don’t play the other teams in the league. Someone’s got to take the loss, assuming we aren’t talking soccer. (I’m totally down with pivoting and using this newsletter to just talk about soccer, btw. Just LMK.)

And now a brief (paid) endorsement:

To the extent that this content is intelligent, it is so because I use tools like Koyfin to make sure I have the best charts, data, analysis, and transcripts available. Koyfin provides a lot of the same tools you get with a Bloomberg terminal or Capital IQ at a fraction of the price.

Interested? Click the button below to get 10% off your first year using Koyfin.

Lucky for us, investing isn’t like that. I’m not saying there are no losers in investing. There are always losers in investing. But losers happen, in part, because too often we fail to remember that we don’t have to play a particular game.

I certainly have opinions on crypto, but nothing I would put money on. At the end of the day, I have no idea whether Bitcoin is going up or down from here. Lucky for me, I don’t have to.

Biotech is insane. Biotech can be the one part of the market where penny-stocks routinely make sense. And other penny stocks really are penny stocks. I faint when I have my blood drawn. I don’t know mitochondria from Micronesia. I’m so confused about genes I don’t even buy Levi Strauss shares. You get the picture: There is no biotech in my portfolio.

I totally duck the investing challenges I find hardest.

And that’s fine. Jason, the smattering half of the Smattering podcast (Jeff is the handsome, articulate half), once put it this way: There are no style points in investing. You don’t get a gold star for going out and learning an entire new industry, ferreting out the good from the bad, and making a solid return vs. just investing in what you feel comfortable with and making that same solid return.

Turn on CNBC, or scroll through Twitter, and there is always a topic of the day. There is the thing that everyone is talking about. You might have an opinion too! But there are no rules that say you have to invest based on it. Everyone in the coffee shop might be sure one particular stock is going to the moon. They might even be right. You can do just as well (spoiler: You’ll probably do better) ignoring them and sticking to your plan.

The title of this post is misleading. It is very hard to go undefeated. Even if you do avoid “games” where you have no advantage, something will inevitable not go to plan and you will have to deal with some losses. Life isn’t a television script.

But you can stack the odds in your favor by carefully picking where you choose to participate, and shamelessly avoiding the areas you want to avoid.

A lot of athletes would love to be able to choose their battles. An investor shouldn’t pass up the opportunity.

Disclaimer: Fits and Starts DOES NOT provide financial advice. All content is for informational purposes only. Stocks mentioned are as reference only, and a mention should not be interpreted as a buy or sell recommendation. The author is not a registered advisor or a broker/dealer. DO YOUR OWN HOMEWORK. The information contained within is not and should not be construed as investment advice, and does not purport to be. The red zone has always been for loading and unloading. There’s never stopping in a white zone.

No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned.