Tag: systematic-investing

As a kid who played whatever sport was in season, when the weather didn’t cooperate, I brought that passion inside to the latest sports video game. It was routine for me to battle my friends in games such as Madden NFL, NBA 2K, MLB The Show, and FIFA. Even the NHL made an appearance from time to time, which was peculiar for a southern kid in the 1980s.

One of the most popular aspects of these games is the ability to create a player. The create-a-player function, as it is commonly called, allows for nearly limitless customization. Your player can be tall, short, big, or small. They can be your doppelganger or look wildly different. Once created, they can be drafted and controlled like any other player, allowing the average Joe to live vicariously through their creation.

The idea of creating an ideal player got me thinking about the equivalent from an investment perspective.

As a parent, I try to encourage my daughters to be inquisitive and develop cognitive skills by answering their questions with explanations that encourage conversation. Note that I said, “try,” because I’m certainly guilty of looking at them in the rearview mirror and letting out a, “Because I said so!” from time to time.

Pretty much everyone has experienced the agony having their TV watching interrupted by the ubiquitous pharmaceutical advertisement. In fact, they have become so commonplace that an assortment of entertaining spoofs have been created, like this one.

As the video above highlights, one of the memorable aspects for many of these medications is the absurdly long list of expected and potential side effects. Now, I respect the fact that these disclosures are important in providing consumers the necessary information to make an informed decision, but that doesn’t eliminate the irony of risking death for seasonal allergy relief.

After enduring yet another round of drug ads during a recent weekend of baseball, I was struck by the similarities between prescription medication and the stock market. Both are designed to address a specific problem, from eczema to paying for long-term healthcare and education expenses. Both also have side effects.

Imagine your client losing 20% of the value of their investment, yet receiving a capital gain distribution that’s also a double-digit percentage. Impossible you say? Well, for some mutual fund investors that is exactly the scenario they face as we approach the U.S. tax filing deadline.

What lessons can we glean from 2022 and the sticker shock many investors are undoubtedly facing?

Something that unites almost every asset manager that believes it uses a disciplined, repeatable investment process is our annoyance with performance chasing. The root of this frustration is how performance becomes a shiny object that can distract some investors, and even some financial advisors. It can be particularly difficult to look away from the shine during prolonged bull markets, when human nature makes investors feel more invincible.

Here’s an ironic twist: The other day I realized that Blueprint Investment Partners, as a trend follower, actually has plenty in common with performance chasers. Except for one (gigantic) difference.