If I told you on Jan 1, 2020 a pandemic was coming, would you sell everything?

Nobody has a clue. If anybody knew what the market's going to do this week, next week, this year, number one, they'd be billionaires. Number two, they wouldn't be telling you.

Rabbi Naftali Horowitz

Ep 23Apr 3, 2022

Financial Advisor to Millionaires Reveals Investing Strategies

with Rabbi Naftali Horowitz

Your advisor earns their fees in down markets because it's in down markets where people hurt themselves.
Rabbi Naftali Horowitz

More moments · 5

When do you actually need a financial advisor? In a down market

I never, ever, ever give people stock picks. Here's why.

I've saved clients tens of millions with one question

The price of a share tells you absolutely nothing

Client A bought railroads. Client B bought the index. Guess who won.

Try this · top 3

Quotes

“My first shares of Amazon, I thank my UPS driver for.”

Rabbi Naftali Horowitz

“You have to learn to zone out of the noise of the short-term in order to be a long-term investor.”

Rabbi Naftali Horowitz

“Nobody has a clue. If anybody knew what the market's going to do this week, next week, this year, number one, they'd be billionaires. Number two, they wouldn't be telling you.”

Rabbi Naftali Horowitz

“Stocks are not eggs. The price of a stock tells you nothing.”

Rabbi Naftali Horowitz

“At some point in your life, if you have enough, more doesn't change anything.”

Rabbi Naftali Horowitz

“Gather good information and don't allow pure emotion and pure feeling to dictate the decisions that you make.”

Rabbi Naftali Horowitz

Takeaways

1 The stock market isn't gambling when you use it as intended: you own pieces of real companies that make real goods and services, and you invest in their long-term prospects.
2 Indexing does the work for you. The S&P 500 is market-cap weighted, so winners like Apple grow into it on their own. An investor who bought individual railroad and bank stocks decades ago missed the tech revolution; one who held the index owns it without lifting a finger.
3 People buy individual stocks because they enjoy it or because they have real industry insight. Everyday insights (his UPS driver's Amazon boxes, a new store-bought baby food) can lead to good long-term investments, but only after research and with a 10-year view.
4 He never gives stock picks because conviction can't be handed over. Without it, a 9% drop makes you sell; with it, a drop is a buying opportunity.
5 A good advisor brings balance: some greed when there's utter fear, some fear when there's utter greed. In 2008 the S&P fell about 52%, and the people who sold made a colossal mistake. A portfolio's bonds and diversification are built for exactly those days, like windshield wipers for rain.
6 Timing the market doesn't work. If he had told you on January 1, 2020 about the pandemic, you'd have sold everything, yet the market had one of its greatest rallies that year. Short term nobody knows; long-term drivers are fairly consistent.
7 Representation bias: we judge by what something looks like, not the facts. A marked-down price tag feels like a bargain; a $538,000 Berkshire share looks expensive though it traded at a lower earnings multiple than many $20 stocks. A stock falling from 60 to 20 isn't automatically cheap.
8 Regret aversion: the pain of a loss outweighs the joy of a gain, and extra money matters less the more you have. That's why the rich shouldn't gamble what they already have for gains that change nothing.
9 Money brings out irrationality in rich and poor alike. Stress from poverty and entitlement from wealth both strain marriages; many wealthy clients say they were happier with less.
10 Melech (king): mem-lamed-kaf, moach-lev-kaved. A king uses mind and heart together to rule his lower urges. Successful investing and living need information, not just feelings.

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