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What do investing and relationships have in common?
Kevin here. In 2010, I was on top of the world. Some of my biggest wins that year?
- Hitting 310 lbs for bench
- Dean’s list after getting academic warning the previous year (..all while going clubbing every weekend)
- Dating a girl who I was down to put a ring on… DAMNNNN
No lie. It’s not everyday when you connect with someone instantly. You know that feeling when someone doesn’t look at you weird after telling them about your obsession with hip hop and pikachus? That’s true love.
But more than what we had in common, I caught myself doing cheesy ass shit like hiding her favorite chocolate in her office desk just to brighten up her day.
She brought out the best in me and I felt like a boss. I could go to sleep knowing that someone (other than my family) cared about me.
Money does the same thing. When everything is going well, it brings out the best in people. You’re more giving to others and don’t have to worry about tomorrow.
Contrast this when you lose money on an investment, your girl leaves you, and shit hits the fan. Thoughts start creeping at night. How are you going to get through tomorrow? Fuck mo money, mo problems. No money? Lots of problems.
That was when I realized that investing and dating both affect your sleep.
While no one wants to lose money or go through a breakup, why is it that some people handle it better than others? It’s no secret. It’s all about the mindset.
Investing can get kinda tricky sometimes, but you can take the same lessons from relationships and apply it to investing. Here’s 3 lessons that you can apply it to investing.
The day when shit hit the fan
She lived in Hong Kong.
I loved long distance. Why? I could focus on the hustle of getting into pharmacy school and building our future.
But she didn’t feel the same way.
She needed that physical presence in a relationship. Everyday she missed me and coped with the pain by getting drunk and smoking weed.
So I did what I could, trying to reassure her that everything would be gucci if we could make it through. Some of the things I did were…
- Calling her twice a day
- Booking the next plane ticket to Hong Kong with my pharmacy hustle and HIV research intern money
- Sending her favorite American product… Reese’s.
No lie. I felt like a Chinese drug cartel using my friends as drug mules to feed her addiction for peanut butter cups and cereal.
Then one day my friend came back from Hong Kong with a USB stick. I still remember opening the USB hoping for nudes, but instead it was a breakup letter.
She found someone new and told me not to call her again. No matter how bad I wanted to see her again and salvage the relationship, it was over.
It went from telling me she loved me one day to breaking contact entirely. No goodbye, nothing said. Blocked number, blocked Skype, no more words. Nothing.
When the Facebook feed popped up that my ex was in a new relationship, it broke my heart. My mind kept racing. What was so different with me and the “new” guy?
… and I sat for days ballin my eyes out. Don’t believe me? Check my xanga.
Rejection sucks. She decided move on with her life without me
…and I had to do the same.
But it’s easier said than done. Even though I knew that I had to move on, I still had hope that one day we would get back together. A year went by and I still didn’t want to date or bang other girls.
That’s when I realized… I had a classic case of oneitis.
Have you ever been so obsessed with someone that you couldn’t see all the other mudda beauties around you? While pickup artists call it oneitis, investors call this throwing your eggs all in one basket.
How does oneitis apply to investing?
New investors are always trying to find the next sexiest investment. Just like ABGs at the club, financial advisors lure us in with funds that promise to “beat the S&P 500”.
…so we go deep. Balls deep.
We get attached and ignore that 96% of actively managed mutual funds do not beat the market over a 15-year span. We tell ourselves that…
“Maybe there’s high fees, but fuck it. If I’m going from rags to riches overnight, then you gotta play big to win big. The ROI is worth it! This is DIFFERENT!
…only to find that one day our investment shits the bed.
The problem with oneitis is that by only focusing on one stock, you’re ignoring all the other potential opportunities in your life. Even worse, your setting yourself up for a huge risk.
Rich people aren’t rich because of one overnight investment. It’s because of years good investments like index funds as a base. If you want to play with individual stocks after, great!
…but hold up. What is an index fund?
An index fund is basically like buying small pieces of bunch of stocks. The way if an investment loses money, you don’t get burned.
Think about it like dating. You don’t automatically marry the first girl you meet. You want to date around, see what’s out there, and get a good foundation for what you want in a relationship.
So instead of looking for the best stock, build a good base in index funds by starting here.
There are always things out of your control
You know that moment of introspection right after a breakup when you start asking… why did I deserve this?
The truth was I wasn’t perfect, but I also didn’t deserve to get broken up via USB letter. But life isn’t fair.
Looking back, it didn’t matter what I did. I tried my best with what I had. I wasn’t willing to give up my pharmacy career just to make this relationship work.
You can’t directly control what other people do. Just like you can’t directly control the performance of an investment. Sometimes life is just out of your hands.
So what do you have control over? You can control the way you react to our obstacles. How does this apply to investing?
In 2009, you might of heard about the Great Recession where people literally lost 60% of their portfolio. There were two types of people given the same situation, but they got different results.
How did people handle it?
Situation 1: People who pulled their money out of the market and took their investment at a loss. Why? They were scared of losing everything.
Situation 2: People who doubled down treating the opportunity like a Slick Deals sale. What happened?
Of course hindsight is always 20/20.
It’s pretty crazy how you can view the same scenario and get drastically different results. In this case it was difference of 250%. Buggati money anyone?
You might be thinking… isn’t there a chance that you might lose money? And the answer is of course. Just because you used a condom and Plan B, doesn’t mean you can’t still get a girl pregnant.
But you can’t control that. What you can do is take a calculated risk even though past performance doesn’t predict the future. If you take a look at the last 40 years, the market trends upwards every 10 years.
The sooner you accept and let go of the things you can’t control, the more you can focus on the things you can.
Moral of the story? Look for the opportunity with every obstacle. Instead of letting fear take control when the market dips, look at it like a trending Slick Deal.
Breakups are part of the game
Most people don’t end up with their high school sweetheart. Whether it was because you forgot to leave the toilet seat down or she was trying to “smell yo dick” because she was jealous, breakups happen.
But just because they happen doesn’t make it easy.
With my ex, it started when she stopped picking up my calls. We would go for weeks without talking. It just seemed like she didn’t care. Why? Because she didn’t care anymore.
It was hard to accept. No matter how much I googled “how to get my ex back” or checked her Facebook relationship status, none of those things would get her back.
My mind couldn’t stop thinking about the effort, work, and time put into the relationship… and how it went to waste. Why should I waste more time with this mudda bullshit?
If you look at it like a one time transaction, you’re right. Why try again? But sometimes we forget that dating is a process with breakups being apart of that process.
And when you accept that it’s a process… it makes it easer to let go. I think this Reddit post sums it up perfectly.
You don’t find a girl just with one date, it takes multiple dates to find someone that you want to be with.
Even though you might be scared about falling in love to avoid getting hurt again, it isn’t an excuse to stay at home. Experience is the best teacher..
…and that’s EXACTLY how you should view investing.
The same feelings come up when you lose money with investing. Why should I invest if I’m just going to lose money anyways?
Just like dating, investing is a process.
You might not find a compatible person on your first Tinder date, but with each date you get closer to finding someone you want to be with.
Every “successful” investor has lost money at some point. Unexpected events are apart of life. A lot of us have the idea of investing with the expectation of never losing a penny, but if you play the game long enough you will lose money at some point.
But regardless you need to keep on investing. Invest every month using dollar cost averaging.
So whether it’s $10, $100, or $1000, just automatically invest every month.
You might be saying… but there’s no guarantee that you’ll make money. You’re completely right. But imagine playing a slot machine with a 80% win ratio.The market trends upwards roughly every 10 years. If you play enough, you’ll eventually win. Wouldn’t you play?
“The best opportunities come in times of maximum pessimism”. -John Templeton
Sometimes no matter what you do, you can’t control the outcome of things. Does that mean you should give up?
It’s not easy coping with the fact of losing 60% of your life savings or seeing your ex start a relationship with a new guy. The hardest part is accepting reality.
You might spend hours asking yourself… where did I go wrong? …and it might not be your fault. But you may never know or understand the reason and have to accept that answers may never come.
Is it hard work? Of course. Money has taught me it’s not the lack of obstacles that make someone rich, but it’s how they respond to shit situations.
While I haven’t found the same success in my dating life, what investing has taught me is to keep trying, trust the system, and eventually you’ll hit big.
So I want to know in the comments…
What are some of your biggest fears with investing?
Until next time,
Kevin the Refugee