I have been posting and tweeting a lot about the dangers of traditional set-and-forget investment strategies, such as 60/40, target date, asset allocation, etc. Last year was the first time in a while that stocks and bonds both went down. If this continues, it puts these types of strategies in peril. Of course, I have received some push back, which is understandable. The entire investment ecosystem was built on these types of strategies, and if people pulled out en-masse, it would be a problem. One thing I want to make clear though: if you pursue one of these types of strategies and hold on for the long term, you may do ok. Just resist the temptation to do anything many would consider stupid, which is harder than it may seem. It’s one thing to envision a large drawdown. It’s another to be staring at it while your spouse is screaming at you. You may go through some rough spots and your end results are likely to be mediocre, but you may build wealth, and as long as inflation doesn’t spiral further out of control, you should keep up. That’s ok, if you are ok with it.
The one way I have ever seen to get rich with little effort is to be born into money, and even then your parents may make you work for it. If anyone tells you otherwise, run. Investing is not easy. If it were, the Forbes 400 would be the Forbes 40,000. It takes hard work, and it probably will include taking losses, which psychologically is going to be difficult. I managed to turn $120k into $20k in my early 20s, without using options. That is extremely painful, and not easy to do. Today, with the popularity of options, YOLO, and 0DTE, it is really easy to lose a lot of money in a short period of time. Even if you are going to delegate to an advisor, you still need to educate yourself enough to know who to delegate to. That is easier said than done; remember a rising tide lifts all boats, and often things that sound too good to be true actually are. Do you want to put in the effort? There is no right answer to that question. So, when I talk about the dangers of some of these strategies, I want to let people know there are alternatives.
Matthew Tuttle is the Chief Executive Officer and Chief Investment Officer of Tuttle Capital Management, LLC. While many managers work within their respective silo when it comes to investment strategy, we look at all methodologies and market dynamics, using forward-looking due diligence to combine methodologies and timeframes to achieve the best results.
The views and opinions expressed herein are those of the Chief Executive Officer and Portfolio Manager for Tuttle Capital Management (TCM) and are subject to change without notice. The data and information provided is derived from sources deemed to be reliable but we cannot guarantee its accuracy. Investing in securities is subject to risk including the possible loss of principal.
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