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If investing feels like an all-or-nothing NFL playoff game, then it’s time to rethink your strategy.
The NFL Playoffs are different from the other major sports in that they are a single-elimination game, as opposed to a series. This format makes the games incredibly exciting, but it’s not something you want to replicate as part of your investment strategy. Instead, you should set aside a small percentage of your portfolio to be used for fun or alternative investments which will help you to minimize, or avoid, some of the more common all-or-nothing strategies listed below:
Company Stock: During my career in Corporate America, a significant portion of my compensation was in the form of company stock. If you are in a similar position, you want to ensure that you aren’t too heavily allocated to your company’s stock. Your company might be the next Netflix, Microsoft, or Google, or it could be the next Lehman Brothers, Enron, etc.
Meme Stocks and Coins: Remember when everyone’s favorite meme stock, AMC, was trading over $200 per share during the height of the mania? It’s currently trading around $5 per share. Outside of the stock market, the crypto industry is littered with a seemingly new meme coin every day. If the last meme coin you heard about was Dogecoin, then you missed Shiba Inu, Bonk, Pepe, the most creatively named one, Memecoin, along with many others.
Sports Gambling: I couldn’t write a column about money and the NFL without including the huge amount that’s wasted on sports gambling. It’s estimated that close to $100B is gambled annually on sports, some of which is more than people can afford to lose. Don’t confuse gambling with investing.
What should you do instead?
Invest some of your money just to learn or for fun, but always limit the amount of these all-or-nothing bets. Personally, I use 10 percent of my portfolio for alternative investments which provide enjoyment, potential for substantial upside, and a way to learn about new investments, while also limiting my downside. For every Super Bowl winner there are 13 teams who lose everything in a single game, don’t let that be you.
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Disclaimer: The information in this post is provided for your convenience only and is not intended to be treated as financial, investment, tax, or other advice. The information is intended to be educational and is not tailored to the investment needs of any specific individual. It is also not intended to be relied upon as a forecast and is not an offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are those of the author. Reliance upon the guidance and information in this presentation is at the sole discretion of the individual.
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