03 November 2023

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The smart investor is not sexy

Luigi Campopiano

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Investing to make a profit isn't sexy; it isn't exciting, nor does it evoke emotions. We all wish to possess the philosopher's stone, the ability to turn valueless metals into gold. We're always on the lookout for the "news" that could change our lives and grant us the wealth we've always dreamt of.

Doing things that are simpler, more mundane is boring: why wait for years for compounding interest to perform its extraordinary task of multiplying when there are fast and efficient ways to achieve ever-increasing capitalization of our investments? Is it better to diversify into all the world's stocks simultaneously, relying on the world's growth over time, or is it better to chase fantasies?

The sexier your approach to investment, the worse your performance will be in a bear market. It's boring to invest our savings in a product that doesn't require constant monitoring or continuous changes, a product whose dynamics you don't need to understand every time. It's dull to imagine that you can keep that product, which fulfills most of our life's needs, in a drawer for years. Is it too simple? How boring is it to have had an increase like the one shown in the graph?

Investing in global stock markets: the average return has been 5.05% over the past 23 years and 12.35% over the last 10 years. What would this unexciting stuff have given you in terms of money in your pocket? Let's check it out by imagining an investment of $100,000:

• From 12/29/2000 to 10/10/2023, the amount would have become approximately $310,000
• From 10/10/2013 to 10/10/2023, the amount would have become approximately $320,000

Boring? Not very sexy? If successful investing is boring, then let it be. It's necessary: time, patience, discipline, and the ability to ignore the madness of the crowd. You can't brag about being boring to your friends and colleagues. No one writes brilliant profiles about ordinary people who diligently save and invest their hard-earned money, keep taxes to a minimum, and stay the course. Not sexy? Patience.