Of Course…But Maybe: Financial Advice From Louis CK

“Every day starts, my eyes open and I reload the program of misery. I open my eyes, remember who I am, what I’m like, and I just go, ‘Ugh.’”

“I don’t stop eating when I’m full. The meal isn’t over when I’m full. It’s over when I hate myself.” – Louis CK

Louis CK is one of my favorite comedians. He is a common sense genius with a natural storytelling ability to make almost any topic funny. My wife and I saw his show in Detroit last year and it was both brilliant and hilarious.

He has a great bit from that tour where he talks about how his good thoughts and bad are constantly in competition with each other.  The premise is that we should all feel a certain way about many topics, but for some reason we get these opposing viewpoints that pop into our heads that are terrible and should not be acted upon.

It’s basically the angel and the devil on your shoulder telling you how to think.

Watch the first few minutes of this video to learn about hisOf Course…But Maybe premise about how our brains work (Warning: If you are easily offended, Louis CK’s humor is not for you):

https://www.youtube.com/watch?v=0O5h4enjrHw

The Of Course…But Maybe line of thinking relates to our financial decisions as well. Here is my take on how we should (Of Course) think about our finances and how we actually (But Maybe) feel and act sometimes using the Louis CK blueprint:

Of Course…
I should spend less than I earn, save for the future, live within my means and stay out of credit card debt. Delayed gratification can be a beautiful thing. Of course I should save more than I earn.
…But Maybe
Maybe, instant gratification is much easier than planning ahead for goals that are decades out into the future. And maybe buying material possessions with the swipe of a tiny piece of plastic feels better for me right now. I can always save later.

Of Course…
I should have an investment plan based on the sound principles of diversification, asset allocation, rebalancing, low costs and dollar cost averaging. Of course I should have an investment plan.
…But Maybe
Maybe, I can hit it big by piling into the hot stock tip that my brother-in-law told me about that’s a surefire, can’t miss. It’s definitely the next Google or Apple. Maybe an investment plan is for suckers.

Of Course…
I should avoid timing the market. Study after study using real world examples of professional investors show that this cannot be done on a consistent basis. Of course I can’t time the market.
…But Maybe
Maybe, I can sell my entire portfolio of stocks right before the next crash hits and buy back in at the bottom. Maybe I can make a killing just by missing out on the worst few days in the market. Plus, I found a guy with a newsletter who claims he correctly predicted the previous crash and bought back in at the lows. He’s bound to be right again.

Of Course…
I have a good idea about what my tolerance for risk is and know I have a very long time horizon until I need to use my investments for retirement needs. Of course I know my risk profile and time horizon.
…But Maybe
Maybe, when the market is going up I decide I can take on much more risk than I stated I was comfortable taking. Maybe when the market is going down I decide I want nothing to do with large losses in stocks and change course again.  I’ll buy back in when things are getting better.

Of Course…
I should ignore the noise from experts on CNBC. Following every tick of the market and every economic data point will only overwhelm me when I don’t put this advice into the proper context. Of course the experts have no idea what my goals, plans, risk profile and time horizon are.
…But Maybe
Maybe, if I follow this one tip about where the price of gold is heading over the next couple of years I can make a ton of money. I heard it was going to $5,000/oz. These people are on TV and in print.  They must know what they’re talking about. Maybe checking in on my portfolio’s value and the daily economic data is a sure way to make me more informed about the markets. Maybe the more time I spend following the markets, the more money I’ll make.

Of Course…
It’s very difficult to beat the market, after costs, so most investors should use simple index funds since they don’t have the time or know-how to actively invest on a full-time basis. Of course, I’ve seen all of the studies that show that index funds are probably my best bet at achieving my long-term investment goals.
…But Maybe
Maybe, I can pick stocks using my fool proof system that picks the fastest growing companies in the market. They are sure to continue to rise in the future. I have a co-worker who has made a killing using this strategy for his portfolio picking IPOs and I’m sure it will continue to work going forward.

Of Course…
I know that we as human beings have a tendency to follow the herd, make predictions based on the most recent events, and become overconfident in rising markets and loss averse in falling markets.
But Maybe…
Maybe, this time is different, just for me.

Of course, this time is never (and always) different.

Further viewing:
If you are interested in watching the rest of Louis CK’s show, you can purchase the entire thing at Louisck.net for only $5.  That’s a screaming deal.

Now here’s the best stuff I’ve been reading this week:

• The economy and the stock market aren’t the same (Crossing Wall Street)
• Fate or Destiny? (Reformed Broker)
  
• The 20 smartest things Jeff Bezos has ever said (Motley Fool)
• When half right forecasts are deadly (Reformed Broker)
• Market wisdom from Warren Buffett (ST50)
• Buy and hold is dead? Crazy talk (Morningstar)
• Don’t work harder, work smarter (Pragmatic Capitalism)
• What does your net worth really mean? (Christian Science Monitor)
• Why is the market rallying? (Big Picture)
• Arian Foster: 6 things I’ll try to teach my daughter (Yahoo!)
• Is it immoral to make stake free forecasts? (Abnormal Returns)
• A dozen things I learned about investing from John Templeton (25iq) see also John Templeton’s 16 Rules for Investment Success