Investing in the Real World

Adam Smith absolutely nailed it when he said “Statistics provided rather bloodless answers.” What you see in a spreadsheet is mostly bullshit because life doesn’t adhere to formulas. Allow me to share a quick personal story.

It was January 24th and I still hadn’t sold my apartment. I was feeling the heat because I was supposed to be closing on my house on March 15th. With little hope of selling in time, I called my bank to find out if there was anything they could do.

I had some money for a down payment, but I wouldn’t be able to come up with the 20% we agreed upon. My mortgage guy asked what I could put down, and then told me he would get to work on it.

The money I might need was in the stock market, which it had been for the better part of the last 5 years. I didn’t have any plans to ever sell these holdings, but at that moment, I had no choice but to liquidate everything.

Life interfered with my plans.

And then, as I was waiting to hear from the bank about getting a loan, a buyer showed up with an all cash offer and saved me from being in a potentially scary situation of carrying two mortgages.

I didn’t want to put my money back into the stock market until I closed becuase I wasn’t sure if the co-op board would approve my buyer, given some unusual circumstances, which aren’t important. What is important is that from the time I found a buyer until the time we closed, the stock market had rallied another 5%.

So here I was, taking a 15% haircut on my portfolio thanks to Uncle Sam, and missing another 5% thanks to the plunge protection team. I experienced my very own bear market because life interfered with my plans.

I’m not beating myself up over this. Life happens. The reason I bring this story up is because it’s so easy to get lost in the numbers. We wonder about what happens if your portfolio includes these stocks or these bonds without realizing that every investor’s journey is different. It’s easy to look at charts and growth rates and forget that statistics provide rather bloodless answers.


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