Chapter 8

Build Your Armed Forces, Not a Gun Collection

As a financial advisor, I spend many hours talking to people about investing. But whether I’m at a cocktail party, at a Rotary Club meeting, or getting my haircut, I also spend a lot of time listening. I hear a lot of talk about short-term issues like interest rates and the upcoming Fed meeting, or what is happening with the price of gold this week, but very rarely do I hear people talk about what their strategic approach is to asset allocation. Inevitably, most people want to talk about what they should buy and what’s hot right now. I listen politely, of course, but my perspective on this is always the same: Stop trying to build a gun collection. Instead, focus on what your strategic objectives are and then select the investment allocation that will give you the highest probability of achieving those goals.

What do I mean by that? Let me try to explain it this way. Maybe you have a friend, as I do, who has a really great gun collection. Of all the guns my friend has, my favorite one to shoot is his silenced automatic .22, because you just pull the trigger and you barely hear the rounds going out; you just watch the target shred. It’s so much fun to shoot that I could see why a person could get really caught up in buying great guns like that. If you are a gun enthusiast, and you have the funds available, after covering all the important things we discussed in previous chapters, then there is nothing wrong with building a gun ...

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