By Jeovany Zelaya, Client Portfolio Manager
I’d like to give you a FREE step-by-step guide on how to fabulously and ridiculously end up with as little money as possible when it comes to your investment portfolio and, along the way, end up hating yourself. Ready!? Let’s go!
1. Don’t save anything at all. Spend everything now.
I just used FaceApp (you know, the one that makes you look like Bernie Sanders), and it opened my eyes to the fact that life is TOO short. My recommendation? Throw your budget out the window and max out your credit cards. You have a 25% interest rate? So what!? While you’re at it, buy a home that you can’t afford, and forget about saving for retirement. Social Security has your back.
2. Put all your money in one stock.
- “Diversification is key to success,” said the loser who can’t make things happen.
Sure, Vanguard reported that U.S. stock returns over the last 30 years show that 47% of stocks were unprofitable, 30% lost more than half their value, only 7% had cumulative returns of more than 1,000%, and the chances of outperforming with just one stock are 10%. Blah. Blah. Blah.
Put your money in one stock, and ride the wave. I mean, if you invested in Apple when Forrest Gump did, you’d be, like, a bazillionaire.
3. When s@!t hits the fan, go to cash.
Timing is everything. Full moons usually tell me that markets are ready to drop, but that’s just me.
The media is pretty good at alerting us when times are tough, so sell whenever news outlets report breaking news. Yeah, you’ll miss the best stock market days, but that doesn’t matter.
Once I sell, I tend to leave my money in my checking account (which pays 0.01% interest). I usually wait until the next Star Wars movie is out in theaters (which is every three years or so) to get back in the market.
4. Invest in what you don’t know.
Not sure how a company makes money? Perfect. Do you usually skip reading the methodology of a fund (YAWN) or the 10-K of a company (Zzzzz)? Great start. The more confused you are about how a company operates or how a manager creates a fund, the better you should feel about investing in that security.
Forget Warren Buffett’s advice to “invest in what you know.” Sure, he’s the third richest person in the world, worth $86 billion, but that old dog hasn’t beaten the S&P 500 Index for the last decade. What does he know!?
5. Buy what’s hot and popular.
Valuations are dumb and BORING. Look, the market is sizzling. FANMAG (Facebook, Apple, Netflix, Microsoft, Amazon, and Google) stocks are tearing it up. It’s true that just four of these stocks have made up 19% of the S&P 500’s returns this year (which is higher than average), and the forward price-to-earnings (P/E) ratio of the FANG stocks is 47.1 (expensive) vs. the S&P 500’s P/E of 17. However, these stocks can’t be beaten! They’re priced to perfection because they are perfect. This same logic goes for all U.S. growth stocks in general.
Thanks for reading! It goes without saying, this was all in jest. We hope we managed to give you some ideas of what NOT to do if you don’t want to perfectly and ruthlessly ruin your investment portfolio.