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The 10 Core Beliefs of Mindful Investors

This blog is the last of a 10-part series which covers everything you need to know to get started on your path to financial freedom:

1. The First Step in Any Financial Plan is NOT What You Think. We Start by Knowing What is Worth Seeking.
2. Developing Your Vision of a Perfect Life
3. Adopt a Savings Habit
Emergency Fund Basics
Eliminate High-Interest Debt
Saving and Investing for Retirement
Paying Down Low-Interest Debt and Building Taxable Savings
Simple, Basic, Mindful Investing
The Final Step – Portfolio Optimizers
10. The 10 Core Beliefs of Mindful Investors

The financial world is full of false promises, delusional beliefs, and outright lies. Most of what passes for financial journalism is an attempt to sell you on a manufacturer’s product or a particular pundit’s worldview.

No one can predict what will happen next (good or bad), so none of the excited sales pitches or catastrophism is helpful in the long-term context.

The challenge is… we are gullible.

“Humans can be duped by liars and conned by frauds; manipulated by rhetoric and beguiled by self-regard… Not only CAN people be led astray, most people ARE… A sucker may be born every minute, but somehow that sucker is never oneself.”   – Tim Maudlin

Mindful Money is a no-prediction zone. We begin by admitting we cannot know.

We place our trust in the broadly-accepted and peer-reviewed academics. We keep our process simple and our decisions few. And, we live our lives focused on the stuff that matters.

We do not care about the hot stock of the day, or Bitcoin, or the latest and greatest thing people invest in – because it does not matter in the long run. Our goal is not to maximize returns (which is impossible). We’re here to maximize life.

To that end, I have written the ten (10) core beliefs of mindful investors, which are at the heart of Mindful Money.

By embracing these ten principles, we simplify our financial lives by defining the right problem, focusing on the right choices, and embracing humility in the face of the unknowable.

The 10 Core Beliefs of Mindful Investors

  1. The only sustainable basis for a relationship is mutual trust. I mean to tell the pure, undiluted truth – as I see it – all the time.
  2. The only rational medium for a teaching or guiding relationship (and the only basis for an investment portfolio) is a plan – be it a simple retirement income plan, or a comprehensive financial and estate plan.
  3. In the long run, the only sane definition of money is purchasing power. Currency, therefore, is NOT money. It’s just currency, and it loses some of its purchasing power every day because of inflation.
  4. Risk, properly defined, has less to do with the short-term loss of currency and more to do with the long-term loss of purchasing power. Over 4-5 decades preparing for retirement and 3-4 decades in retirement, inflation is the dominant risk factor.
  5. Equities (the partial ownership of the Great Companies in America and the World) have been far more effective than Bonds (and other fixed-income investments) at preserving and enhancing purchasing power. I prefer owning over lending.
  6. Equities’ superior long-term returns are a function of (in fact, they are directly caused by) their greater volatility. But volatility ≠ risk, because all historical declines are temporary, while the advance of equities has been permanent. Volatility fades; return endures.
  7. The economy, markets, and future relative performance of investments cannot consistently be predicted or timed. This is OK, because next to your asset allocation and the overriding issue of behavior, prediction and timing are irrelevant.
  8. NO ONE can gain an advantage over the equity markets by going into and out of it (or parts of it) in response to current events or perceived threats. I don’t attempt to analyze (much less predict) current events. I believe in patiently holding the portfolio which seems best suited to my long-term goals.
  9. Uncertainty – in markets and indeed the world – is the only certainty. We do not move from periods of uncertainty towards periods of certainty (as we imagine); rather we move from one uncertainty to the next. Our only option is to practice rationality in the midst of uncertainty.
  10. I believe that long-term optimism is the only long-term realism – never more so than at the present moment.

If you find yourself nodding along to the above, you are in the right place. If you find yourself rolling your eyes, or think I’m nuts, this is probably not the place for you. We are in it for the long-term, steady-as-she-goes, most reliable outcomes.

If you can embrace these ten principles of money, you will both enable greater financial success and enjoy greater well-being.

If you need a little support, I’d be happy to speak further. I’m a “Contact-Us” away.

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