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To defend your portfolio, all you really need is a sincere desire to learn from your experiences (both good and challenging), and a willingness to confront the hidden assumptions and biases that lie behind your own financial behaviour. (Jupiterimages/Photos.com)
To defend your portfolio, all you really need is a sincere desire to learn from your experiences (both good and challenging), and a willingness to confront the hidden assumptions and biases that lie behind your own financial behaviour. (Jupiterimages/Photos.com)

Expert’s Podium

Can you defend your investing strategy? Add to ...

  • What do you see as the larger purpose and value of your wealth? Have you discussed this with your spouse? Your children? In what ways do you have similar or divergent perspectives on this question?
  • Write your “Top 10” list of lessons learned about yourself, about investing and wealth, and about others during your journey so far?
  • What lessons would you like to pass on?
  • Describe or create your “100 year plan” for your family.
  • What role would you like money and wealth play in your relationships with your children, grandchildren, and/or parents?
  • To whom do you feel a sense of obligation when it comes to the use and distribution of your wealth? How do you wish to fulfill this obligation?
  • What would you like to see as your epitaph?

As you can see, the purpose of the review is as much about goals and vision as it is about what stocks you own. In my experience, this is the area where a lot of UHNW individuals lack clarity. Or they may have it clear in their minds, but it’s difficult to articulate. The idea of asking these questions of yourself is to get you to think differently – about your attitude towards wealth, your goals, and your investments – and to benefit from the collective intelligence of those sitting around the table with you.

At the core of the Defence are the questions and feedback from fellow group members. Members are encouraged to be direct, respectful, and brutally candid. And I should add, they use their “you-know-what” detector where appropriate.

The word “care-frontational” is often used to describe it – I think it sums up the overall vibe quite well. The members care deeply about each others’ well being, and truly look forward to the opportunity to help. But they aren’t going to sugar-coat their suggestions or their criticisms. There would be less value if the feedback was fluff.

Even if you have no desire to confidentially share your portfolio or your in-depth financial situation to others, ask yourself these questions. Your answers will tell you a lot about the way you envision wealth, and what you need to work on. And if you can’t answer them – well, that tells you something very important too.

“Convince me you really understand how this investment works.”A common question put to TIGER 21 Members, particularly new ones. Too often people invest in exotic assets (or individual stocks) without really understanding how they work. This can lead to all sorts of trouble, as proven in the 2008 market downturn.

I’m not saying you need to have a PhD in finance or a CFA designation to invest in a given opportunity. But if you can’t articulate in broad strokes how a particular investment works, then you should take a long, hard look at whether you should be in it.

I thought it would be interesting to share with you a selection of questions I’ve heard at real-life defences, along with some of the actual advice that was given by TIGER 21 members:

“Other than making money, what’s your goal here?”

Sure, we all want to turn a profit. But the difference between a speculator and an investor is goals. Ideally, your assets will be tied to a particular financial or life goal: “this investment helps me sleep at night”; “this one will generate income in retirement”; “these stocks will help me send my kids to Harvard”; and so on. If you can’t articulate why you’re investing in X, then you need to re-examine your overall investment plan.

Another question that comes up a lot is “Can you afford to go ‘all in’ on XYZ?” Particularly with former business owners, or with those who have just joined TIGER 21. Many UHNW individuals are quite comfortable with taking risks. As a result, they load up or concentrate on a particular stock, or a particular sector, or a particular business asset. That’s fine when the goal is wealth accumulation. But when the focus shifts to wealth preservation, “all in” should be reserved for poker games, not portfolios.

“How will you know you’ve ‘won?’ ”

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