Informed Risk

"I don't want any risk." So said the financial illiterate.

Risk means nothing out of context. The illiterate subscribes to the uninformed risk scale. He thinks that risk is somehow avoidable, but as we know this is impossible. Becoming financially literate is not easy. That's why we exist.

We are exposed to various flavours of risk. "What do you mean by risk?" the real financial adviser asks.

The uninformed only thinks of investment risk as volatility. I propose that we redefine investment risk. The uninformed risk scale has one flavour of risk: volatility. The informed scale of risk has three flavours of risk: loss of capital, inflation (loss of purchasing power), volatility (loss of behaviour).

Listen to more on this topic here.

Main Feature

The (Nearly) $1B Solo Advisor: Scaling Up Client Focus By Outsourcing Everything Else, with Dan Goldie [99 minutes]

To those advisers who wish to build a small giant company, if any adviser on earth has created 'adviser nirvana' it may just be Dan Goldie. No staff management, rich clients (who always make better clients), a nailed investment process (DFA of course), simple processes but elegantly executed.

Also no pandering to 'the money' - we meet/issue reports quarterly to our platinum (richest) clients 🤯. No thanks.

The idea of a monthly educational newsletter is very appealing. I think this is something I will focus on at Maven Adviser - a monthly dose of Vitamin C delivered while docked in port, not out in choppy seas.

Articles and Blogs

The First Rule of Human Risk is… [3 minutes]. Influencing human decision-making is not the same as programming an algorithm.

The Five Sources of Uncertainty [12 minutes]. It's useful to consider the methods that expert decision-makers use to deal with uncertainty.

The Laws of Investing [18 minutes]. The forces that influence all investments.

11 Stunning Visualizations of Gold Show Its Value and Rarity [infographic]. The shiny useless metal still grabs our attention.

Planning > Plans [2 minutes]. Rather than focusing on the outcome we should focus on the process.

Why the stock market must go down [5 minutes]. Without the threat of losses, the gains never show up.

There is never a good time to invest [4 minutes]. We are programmed to choose safety, even at the expense of joy, in an environment where safety abounds and joy is hard to find.

Why Complexity Sells [4 minutes]. The problem with simplicity is that the reps don’t hurt, so you don’t feel like you’re getting a mental workout.

Paint a picture of working with you [2 minutes]. What if you promoted instead the outcome you are trying to help them produce?

Podcasts

Bear Markets Are As Regular As Your Birthday [5 minutes]. Another dose of Vitamin C.

Joe McLean – How to be a Pro’s Pro [52 minutes]. From the importance of service and low self-orientation to the impact of strict standards for who you work with.

Seth Godin | Shining in the Light of One-Star Reviews [67 minutes]. When something is worth doing, take the risk and go for it.