Conversations With My Brother In Law
A little post from our Chief Investment Officer
One of my most engaged clients is my brother in law of all people. He's also a huge sports guy.
Yesterday we did a little portfolio review/update.
He holds roughly 30 different investments in his portfolio.
Conversation went like this
Bil: remind me why we hold some of these investments? Don't stocks make the most money long term, so shouldn't I just hold stocks?
Me: Stocks are a great place to invest long term but as you have noticed they jump all over the place in the short term. The reason we hold so many different investment classes is generally speaking we want to own things that move differently to each other to reduce the big swings.
Bil: Yeah but I'm happy to gamble
Me: It's a bit like this bro, you are going to be invested for 40 years plus. Like a test match we don't have to swing at every ball. We can nudge 1s and 2s until we get the juicy half volley to smash through cover. We want to score a double hundred here and we can't do that by only hitting 6's. By keeping some wickets in hand (or cash) and carefully choosing our big shots we can keep batting.
Bil: hmmm right?
Me: You own a lot of stuff that regularly puts cash back into your account. That's your ones and twos. When we get that half tracker or high risk high return opportunity, we can use that to try to clear the pickets.
Bil: So it's like a free hit?
Bil: Awesome. This finance stuff is fascinating.