Wanna Bet?

I listened to Annie Duke on Patrick O’Shaugnessy’s podcast this week - and it was one of my favorite podcasts in a long time. Annie is a former professional poker player, and author of the book “Thinking in Bets.” There is a little bit of something for everyone in the podcast.

What struck me the most was towards the end - when she says how we should avoid saying (and challenge when hearing) “I’m sure of this.” A better way is saying “I’m maybe 80% sure” or “How sure are you?” There are countless applications here, from finance to personal relationship to politics. When we make definite statements with surety, not only are we guaranteeing something we probably can’t guarantee, but we’re also closing the door for a conversation with someone who might not agree.

Thinking about investing - we can never deal with certainty. We can be confident, but never sure. When I’m constructing portfolios I have a relatively high conviction that the portfolio will perform well, but I’ll never guarantee them to.

Historically, from 1926-2018 the S&P 500 index is positive 54% of any given day. A coin-toss, really. Zoom out to one quarter, and it’s positive 69%. One year: 75%. 5 Years: 88%. 10 years: 95%. And 20 years it’s positive 100%.
Source: A Wealth of Common Sense
So when a client asks how sure am I about a portfolio, I have statistics to back things up - but even then it’s best to case it as I’m about 95% sure over a long enough period of time, this is the right portfolio for you.

I'm about 99.5% sure this is a better approach. 
Interesting Resources 

1. Twitter - Shawn Smucker (published and professional writer)
“Nothing destroys my hope for humankind more than the fact that some people still insist on putting two spaces after end punctuation.” 

This blew my mind. I’ve been double tapping the space bar between sentences for as long as I learned to type in 6th grade. This is evidently wrong. And now I’m finding it one of the hardest habits to break I’ve ever attempted. (Quite literally - I typed out the body of this email double tapping before plugging this resource in and had to go correct myself.) More verification here.  

2. TapRoot - Live Your Core Values Exercise
I’m in a constant hunt for ways to better ask questions of clients to dig deeper into what their personal values are, and how we can construct financial plans to live them out intentionally. This is a new tool I came across that you can work on yourself if you’ve got 10 or 20 minutes. 
Let me know by simply replying if this certainty idea rang true with you, and ways you plan on perhaps changing up the language you use, or challenging others when you hear it. I really do believe that it can open the door to dialogue, especially with people we don't agree with, which is (highly sure) a good thing.

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