Gambling vs Science | Brandon Averill, Justin Dyer | AWM Insights #91 - a podcast by AWM Capital

Fundamentals are the science of investing. The data and evidence prove that long-term investors that stay tax-conscious win over the long term. Smart diversification, managing emotions, avoiding media pumping fear and greed, and letting markets work for you is the proven way to invest for wealth. 

Gambling and speculation will always be more “fun” for the risk-takers. It is also a good way to have poor returns, high taxes, and at worst, destroy your wealth. For every home run to be flaunted in the media there are hundreds of strike-outs. 

Risk and reward are always related. There is no free lunch. There are no shortcuts to build wealth.

EPISODE HIGHLIGHTS:

• (0:28) News: US Inflation at highest level since 1982. Unemployment dropped to lowest level since 1969. 
• (1:56) Starbucks employees at a location in Buffalo voted to unionize.   
• (3:19) SEC Chair, Gary Gensler took aim at SPACs and the risks they pose to investors.
• (4:20) The indexes are near all-time highs which is hiding the carnage of many speculative stocks. Many are down more than 50% from their highs. 
• (5:31) Are you a long-term investor or are you gambling to hit a home run.
• (6:03) There are over 6,000 different cryptocurrencies. Picking the few winners is too risky to bet your financial future on. 
• (7:17) The fundamentals of an investment are the science and logic behind it. This drives a future value that should be your gain.
• (7:55) Crypto makes huge claims that are a stretch to ever be realized.
• (9:15) Crypto is only one use of the blockchain and it's possible to not even be the best use of the technology.
• (10:20) You can apply the same logic picking crypto to stock picking. 
• (11:00) Over Allocating to too few companies or too few cryptos can unnecessarily risk your wealth.
• (12:00) If you have your core priorities taken care of, then you can take speculative risk. You can take chances on low percentage opportunities with massive upsides. Because if you lose it all, your financial security is not in jeopardy.
• (12:47) Markets have been said by some to be overvalued for the last decade. If you had acted on that information waiting your returns would be terrible.
• (13:20) Valuation data doesn’t correlate with forward returns. If they did, it would be easy to outperform the market.
• (14:20) Media never goes back to see if they were right with their predictions from the year before. Keep a look out for all these fortune tellers heading into the New Year.
• (15:30) Market valuations are high but that knowledge doesn’t help you with forward returns.
• (16:38) Speculating is fun when it comes to fantasy football, sports gambling, and casinos. Building generational wealth with science and data removes the uncertainty of hoping to get lucky.
• (17:45) The media loves to rile up investors predicting gloom and doom. They also feed greed. This is their business model. Your advisor should cut through the noise they create and give you the clarity you deserve.

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