We don’t need to be great at investing, we just need to be good enough. We all know that the economy is hard to predict. We’re actually good at predicting the future, except for the surprises, which tend to be all that matter. By a simple google search, we find that over a 20-year period, nearly 75% of actively managed investment funds failed to beat the market. As long as you dollar-cost average into S&P 500, you would have beaten 3/4 of professional investors who spend 8 hours a day crunching investment data. In most years, the biggest economic risk turns out to be something nobody could have seen coming — Lehman Brothers’ failure to find a buyer, Covid, Russia invading Ukraine, LUNA crash, FTX filing for bankruptcy, recent banking crisis, and the list goes on. The biggest risk is always what we don’t and can’t see coming.
We spend so much time and effort forecasting the economy only to have that forecast upended by an event no one could have predicted.
I believe we can better invest our time and energy more efficiently elsewhere. We don’t need to be great at forecasting. I contest that we can’t be, especially when it comes to forecasting the future. However, we can be good enough at forecasting. I’m confident that the global market in general will recover. I’m confident that people will become more fearful in seemingly bad markets. I’m confident that people will become more greedy in seemingly good markets. I’m confident that there will be mistakes, accidents, booms and busts along the way. By no means is this detailed, but this manner of forecasting is good enough. Let’s spend less time and energy attempting to shorten the time taken to reach financial freedom, and more time and effort on defining what makes a happy life for us. Be honest to yourself, and actually put an end-goal sum to how much you want to earn. I believe most of us would be pleasantly surprised to discover that we don’t want to live like royals while stressing over the 1s and 0s. We just want a life that is good enough.