I wasn't going to look. I knew it wasn't going to be pretty. But last week, I got up in the middle of the night to take a look at my retirement account.
Oh.
I am not a high-flyer investor by any means. I'm not a keep-it-all-in-a-cash-account-so-it-can't-lose-any-value (variation of the old under-the-mattress strategy), but I'm not a big risk-taker either (just say no to crypto). I'm balanced, I'm hedged.
Still, the market's the market, insidious and unpredictable. And down. Big down from last year.
I'll not going to panic. I'm in hold 'em mode.
If I went back and looked, I'd likely find that my paper loss is probably the same amount as my paper gain from the year before.
The market. That bad boy giveth and that bad boy taketh away.
But the older you are, the harder it is to recoup a loss, paper or otherwise. At my age, when it comes to my retirement money, I'm a subtractor (minimum required distribution, and all that), not an adder.
So maybe I should have been shrewder, smarter, more observant, more involved, more interested, etc.
But since I was none of the above, I missed my opportunity to be another Edward Avedisian.
He's the retired Boston Pops clarinetist (and Boston University alum) who just donated $100 million to BU's medical school. Avedisian:
...scored big picking stocks with the basics — that is, research, patience, and a long-term focus. But he also confesses to having had a high tolerance for taking big risks, including borrowing money to magnify his bets and playing in the options market. In other words, his approach isn’t for everyone.
Add in a remarkable run of good luck and the power of compounding gains over four decades, and Avedisian improbably turned a modest initial outlay into a fortune that could underwrite one of BU’s biggest gifts ever. (Source: Boston Globe)
That "modest initial outlay," by the way, was somewhere between $10K and $20K. (The max 401K contribution in 2022, by the way, is $20.5K, the 1982 equivalent of about $61K today...)
Avedisian says that "success is the intersection of opportunity and preparation." He was single and "lived modestly," which helped him develop the risk tolerance to make big bets. And he spent his free time delving into research - financial statements, IPO prospectuses, the financial news - so his bets were pretty informed. His primary focus was tech stocks.
He also bought on margin (c.f., risk tolerance), and he rode out bear markets.
”If you own good stuff, stay with it.” he said. The market “will turn around soon enough. . . . There is a lot of opportunity coming.”
Like most amateurs, most of my money's in mutual funds. But mutual funds or individual stocks and bonds, I will be taking that bit of advice and ride out this bear.
Still, I'm wondering whether it's too late to actually get interested in "the market". Probably. Make that absolutely. I got this far in life with zero interest in it. Why stop just because I made an ill-advised 2 a.m. visit to my retirement account and gulped.
Avedisian is no longer an active investor. But if he were, I sure wouldn't mind his managing my money for me.
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