What’s My Investment Game?

I’m a simple man. If I see a Morgan Housel blog post, I click it. His most recent post, “Play Your Own Game”, got me to ask the question – what is my investment game? 

The genesis of his post was due to someone asking him how his investment views changed over the last decade. He said, “I’m less judgemental about how other people invest than I used to be.” Lucky man. I think the investing period from March 2020 until now will be known as the FOMO period. Whether it’s Gamestop, crypto’s, NFT’s, trading cards, or the general market, everything saw an increase in price. Outrageous gains were shared via social media influencing others (myself included) to take bets so they could also share their gains. 

For a full year, anyone could blindly put their money in an investment and they saw their portfolios gain value. It’s hard not to be influenced by a screenshot of a crypto chart or an options trade wishing that you did the same. You are missing out on life-changing money. If I just put a few thousand into Dogecoin at the start of 2021, then I would have over $100k now. I’m sure all of us have had a similar thought. I have to remind myself, investing in crypto isn’t my game.

I view investing in cryptos like a popular crypto gambling game called “Crash”. The game starts by having everyone place a bet before the round starts. The game works by rewarding the players that keep their money on the table for the longest. You can pull your money out at any time to lock in your profits. There is a multiplier that comes up on the screen and the longer you have your money out on the table, the bigger the multiplier is on the bet you placed. The catch is that there can be a “crash” at any random time. If you still have your money on the table when there is a crash, you lose your bet. The crash could happen within the first second at a 1.02x multiplier or could last until the multiplier is 50x. It’s random and changes every round.

This is how I view investing in cryptos. It’s not the game for me, but it can be for others. I look at an investment in crypto as I’m hoping the next person is willing to pay more than what I paid. How long can you keep your money on the table until it goes bust? You could say the same thing about investing in stocks, but I feel more comfortable putting my money in stocks because companies generate cash flow. The cash flow is either reinvested in the business to help grow or distributed back to shareholders. I’m willing to buy shares of a company with the anticipation that it will generate cash in the future. I have a hard time coming up with a thesis for cryptos besides that I’m hoping that the demand is greater in the future than it is now. Demand could continue to increase for even larger gains, but it’s not a game that I want to play.

This is the beauty of Housel’s point, we are all playing different games. What might work for one person won’t for another. I’m fine with waiting 40 years for my money to compound. I feel more comfortable doing that than potentially “crashing” right after I make an investment. All that being said, I hope that 10 years in the future I’ll care less about the money other people make. There was a point where I was going to buy Blackberry stock back in January when the meme stocks were going out of control. I wanted to be a part of the ride and make some money on it. If it wasn’t the weekend, I would have hit buy on the order for some shares. I had FOMO. I wanted to make money like everyone else. 

So what is my investment game? What am I trying to achieve? What are my goals by investing in the stock market? 

I’m a long-term investor. I have a 50+ year time horizon that I’m working towards. I’m looking for my investments to work along with my salary in the near term. I don’t have the risk tolerance to bet my livelihood on my ability to trade. I want the supplemental salary I generate from my job to be used for long-term investments. I want to bet on broad market trends and the fact that the market will continue to grow at an annual rate of 7-9% per year. I can achieve this by investing in broad index funds and publicly traded companies.

In the medium term, I want to start building equity in a private enterprise where I have control. Investing in publicly traded companies is a great way to make a return on your money, but having equity in a private enterprise has a much larger variance in return potential. Your company could go bust and you lose all your money, or it could be a potential 100+ bagger. Owning equity in public companies is fantastic, but for my personal goals, I would also like to have equity in private companies as well. 

So what do I want to try to gain from these investment returns? The ultimate goal is the freedom to choose what you want to do with your time. It’s not having a jet, yacht, or mansions, it’s the ability to wake up and have nothing on your agenda. I also want to be able to provide a life for my family where money isn’t a constraint on decisions. I don’t need to stay at a 5-star hotel in the south of France. I hope that having a blown transmission or refrigerator is just a minor inconvenience to work through. That is what I’m trying to get out of my investments. I will have a salary that will support my lifestyle, then eventually my W2 will matter less and less as my investments compound. 

This is what works for me, but it might not work for others. The important thing is to realize what game you want to play and don’t be persuaded by others. It’s much easier said than done. It’s something that I’m still working on and I hope in 10 years I can have a similar answer to Housel. 

Peace and love.