Stock Market Update – July 9, 2022

A book that I go back to all the time is The Psychology of Money by Morgan Housel. It is written like a compilation of blog posts, so it’s very easy to re-read a chapter often. This week, I spent a good amount of time thinking over one of the concepts he discusses in the book: “manage your money in a way that helps you sleep at night.” In my decade-plus career in the traditional financial advice industry, this concept was solely used in the context of managing risks. To sell fear. Buy this life insurance so you can sleep at night, knowing your family will be ok if something happens to you. Buy this annuity so you can sleep at night, knowing you won’t run out of money in retirement. Buy this mutual fund so you can sleep at night, knowing your money is being professionally managed. But I’ve personally found it better to apply this concept in the opposite manner. For me, managing my money in a way that helps me sleep at night is having a high level of confidence that I will achieve high long-term returns. It’s having confidence that wealth — and the freedom it brings — are coming to me sooner than retirement. I can sleep at night because I’m not anxious about the future. I’m able to find more joy and satisfaction today. This type of mentality only comes with having an investment strategy that puts long-term probabilities in my favor. One that deemphasizes short-term results. This, along with a solid overall financial plan and the psychological discipline to stick to it, is better than sleeping pills. Happy Saturday and, for those in the US, have an awesome holiday weekend!