Investing and Parenting are full-time jobs for me. Both create unnecessary drama. Presidential tweets and starting middle school just add to that. Both require understanding the left brain and the right brain of yourself and of others. Both overvalue the present and undervalue the future. This creates a lot of paradoxes.
Here are some of the common paradoxes that I have noticed recently. I would love to hear your stories and what you have seen in this space or in the overlap between your parenting and professional lives. Enjoy!
Parenting and Investing is hard because it requires a lot of reasoning and logic while working with something or someone that is unreasonable and has no logic.
Given the development of brains take about 25 years, we can often see when our kids are not being logical. It is our job as parents to understand that and also apply reason and logic that can translate to them.
The markets are quite similar. Emerging Markets today are reacting to a virus that someone obtained - they are down 2% and the other markets around the world are equally as illogical about an event. We must use reason and logic with this illogical situation from viruses in China to bills passed in Congress.
Parenting and investing is hard because it requires an infinite mindset toward freedom and at the same time a mindset that requires installing structure and discipline.
Investing at its best is based on rules and evidence installed into a process - the process isn’t about “beating the market”, doing well today, or giving you something to brag about to your brother-in-law. It is also about dealing with small, but frequent setbacks, that make the market stronger over time. In the long run, this process can be rewarded if implemented correctly.
Same goes with parenting. Our kids have bad days - they lose games and robotic competitions and get a poor grade at school. These are all part of the learning process toward raising an adult. Giving them the freedom to fail, while providing the structure to succeed is a delicate balance, but it makes their portfolio of social skills stronger in the long run. You are constantly trying not to fail while recognizing that failure is good and presents opportunities for your kids and your portfolio.
Parenting and Investing are hard because it requires sticking with extreme process vigilance and guidance, but you will be at your worst when you are trying to be too controlling of the outcome
We all have had an instance where we have been the helicopter and bulldozer parent - it usually involves a transition where we feel that life isn’t fair or is implicit to our kids at no fault of their own. When we step in, it can be a teaching moment or a control moment.
Investing requires you have a plan and stick with it religiously. If you focus on the outcome instead of the process and try to control that outcome, your portfolio will suffer with inferior returns.
Parenting and Investing is hard because you have no idea what your kids or the market are doing, but you have to know exactly what you are doing.
I’m going to keep this simple. Parenting is doing the impossible for the ungrateful. On top of that, parenting is hard because you have to always do what you say you’re going to do. Investing can be simple, but it isn’t easy. It is next to impossible to read the markets and the markets really don’t care about you - so they are as ungrateful as your kids.
Parenting and investing is about a spectrum of options but our decisions often feel binary.
Our answers to our kids are often “yes” or “no”. Our investments are “buy” and “sell” or “all in” or “go to cash”. With our portfolios, we can have an allocation toward stocks, but the decision to buy and sell often faces a lot of internal emotional strife. Punishing our kids or telling them they can or can’t do something feels the same way.
Parenting and investing decisions present tough choices in unfavorable situations because you care, but your kids and your investments often don’t.
You aren’t raising a child, you are raising an adult. You are going to face adversity, often created by that human you brought into the world. Things are going to be made a lot harder than they need to. Why? Because you were lucky enough to pass on to them your personality and attitude. You will butt heads and while it may not show, you care a lot more than they do.
Your investments are the same way. You bought those shares of that biotech that didn’t get their drug approved by the FDA, now go make the undesirable decision to sell and admit defeat. When you do this, you are moving on. Nobody cares - the company has thousands of investors. You are simply an account number to them. But this company was going to cure cancer...yeah, sure it was. It’s down 80%, take the loss and go invest for the long term, not the lottery ticket.
Kids - same thing. Don’t win today as a parent and let him have ice cream after hitting his sister. Let him pay the price and both of you will gain perspective and learn from the incident. That has a greater payoff down the road.
Parenting and Investing - fun, but scary; needed, but hard being “always on”; you care, they don’t; lots of options to process, but binary decision outcome. Every minute can’t be as fun as when Nathan and Shannon were ziplining in Costa Rica that you see in the picture. Both require a lot of work and process vigilance, but it can be very rewarding.