Here in the Midwest, we have something called Level B roads. Nebraskans know them as “minimum maintenance roads”: they’re those dirt roads that are not maintained by the county or state. They’re usually used for farmers or the folks who reside in the remote country.
These roads are functional but can be dangerous. The road is usually only big enough for one car to pass through. Dry dirt can easily turn into a mudslide after a downpour.
Every time we pass one of these roads, we see a warning that states “Enter At Your Own Risk.” Meaning: If you get stuck, you will have to find your own way out. You are liable.
These Level B roads remind us a lot of speculative investments.
Speculative investments attempt to outperform the market, quickly. They are high-risk, and focus on short-term price movements rather than long-term results. (For examples, just think of the fads or headlines that seem to come and go the fastest in the investment world.)
Speculative investments have always been a trending topic, but we haven’t jumped on the bandwagon.
Risk and reward go hand in hand. High volatility means big swings—maybe you earn a big whopping percent or you lose it—and most investors aren’t signing up for that kind of ride. Clients, many of you have been working with years and decades to grow your wealth. There’s no need to hop on a Level B road going 60 miles per hour: there’s time to take in the view and pick and choose our route!
Speculative investments might get you to where you’re going, faster… or you could wind up stuck with more problems than before.
We prefer to pick our positions in equities with a little more perspective. We track our investments weekly, rebalance portfolios quarterly. We don’t have to think too hard about trying any shortcuts, because we are in it for the long haul.
Clients, we sure appreciate this journey with you. Please call or write with any questions.
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