You Are the Average of the Five People…

Investment peer group

In case you missed it, you can watch an “At a Glance” summary of this week’s blog posting here.

Upgrade Your Peer Group

The fifth step in the Fearless Wealth approach is to upgrade your peer group and stop investing alone. If you want to see all five steps you can do that here.

Why is your [investing] peer group so important?

Your peer group determines a lot of what you have and don’t have in your life. Your health, wealth, satisfaction, etc. is the average of the 5 people you spend the most time with.

So if the 5 people around you make $100,000 a year you’re going to make about $100,000 a year. But if you spend most of your time around people who make $1,000,000 a year you’ll probably be closer to that million dollar range. This rule applies to almost every other part of your life. You want to be happier (whatever that may mean to you) then be around happier people.

you are the average of the 5 people
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The Pick of the Month Newsletter Peer Group

Step five in the Fearless Wealth Approach is upgrading your [investment] peer group. Peer group building is different today because we [can] surround ourselves with online peer groups.

If your peer group is constantly telling you about an imminent crash that will wipe out your retirement, how the heck are you suppose to even plan for a stable future?

If your investment peer group is constantly up selling you more research about secret meetings and back office deals, how are you suppose to know what to actually invest in?

Investment peer groups matter. And one of the most costliest peer groups to be part of is the “pick of the month” newsletter peer group.

Positivity is Hard when Pounded by Negativity

Is every “pick of the month” newsletter filled with a sky is falling narrative? Of course not. Does every editor of every “pick of the month” newsletter sit around thinking up ways to scare you? Of course not. AND the “pick of the month” newsletter industry has learned very clearly that scary sells.  AND “everything will be fine” doesn’t sell. At. All.

So “scary” is the “cat video” of the pick of the month newsletter industry. And if you subscribe to one to three (or more) of these newsletters, this means you are also getting their “daily’s” and marketing emails. Which means you are getting slammed with negative thoughts hourly. How are you suppose to stay positive within this negativity? You won’t win.

Forget about their 30 to 40 ticker symbols and whether they are even good, your [investment] peer group is literally killing the stability of your future. This is why there are people with 80% to 100% of their money in cash for the past three, four, five plus years. They are waiting for the 70% drop in the [fill in the blank] asset, which hasn’t happened.

Complication is the Enemy of Performance

If the investor wants performance then they’re not going to get it through complexity. A simple approach is a barrier to most humans. Because a lot of people think simple means weak or easy. But actually, simple is neither weak nor easy. And that is why simple is so hard. Simple is ultimate sophistication. To get a powerfully simple approach means that you’ve waded through the world of complexity and you’ve literally filtered out everything EXCEPT what matters most. William Occam figured this out 400 years ago.

Complexity And Performance

Here’s How To Do “Simply Powerful”

What would William Occam say matters most to investing today? Well, in a world of four asset classes that operate in a zero sum game. He’d probably want to know which asset class is performing best historically. If he did ask this question and was willing to spend some time looking for the answer, he find that stocks has the best performance record. Except for shorter periods of time when it is the worst.

So William might come up with two questions:

  1. Should I be IN or OUT of the stock market.
  2. And If IN where? And if OUT where?

If an investor get’s those two questions right, they kind of get everything right. But there are a lot of problems with this powerfully simple approach. First, the investor doesn’t need 30 to 40 symbols. But those 30 to 40 symbols provides the investor with visual diversification. And if that same investor only had four or five symbols they might feel like their money is more at risk. So even though it might be the simple approach it wouldn’t be the popular approach.

Two Questions

It’s the Simple Principles that Last

Look at any entities principles that have lasted the test of time. You’ll notice immediately all of their principles are simple. Take the bible, which of course doesn’t use the wording the 10 principles but the 10 commandments. They are simple. Don’t kill. Don’t steal. Don’t Covet. Honor your parents. They are simple.

And when you read those two questions above investing, you’ll notice they are simple. The first question is really asking you of the four asset classes (stocks, fixed Income/currency, commodity, real estate) which is winning? And since stocks are winning 78% of the time the question simply cuts to “in or out of stocks…?” And then the follow up question tells you where within the stock world or where outside of the stock world (i.e. fixed income/currency, commodity, real estate) is best.

Simple. But not easy. Especially if your peer group has been telling you for years that investing is complicated, complexed, random and confusing. No wonder people build complicated strategies.

Upgrade your peer group.


How to Make Cryptocurrencies Simple

Last week when I talked about cryptocurrencies, at the very end I gave you two price charts. One price chart showed you how to invest in the technology side of cryptocurrencies with one simple ETF. And the other price chart showed you how to invest into the currency side of crypto’s with one simple ETF.

The two price charts were not solicitations to purchase. They were an example of how to be powerfully simple and simply powerful within an investment that is very complex and misunderstood.

Life Within Temporary Complication

For the past two months we’ve had anywhere from one team to four teams of contractors at our house in the Seattle area. What I noticed. If we keep the house clean, including the sides of the house with building material, etc. then the contractors know to pick up after themselves and keep the place clean.

And about two weeks ago I stopped picking up the sides of the house because of workload and lifeload. What I noticed was the contractors would just through their debris on the already existing pile. And the pile just kept getting bigger. These were the same one to four groups of contractors as before. Their behavior didn’t change, mine did. Their behavior was/is, “do what the owner does.”

If the owner keeps things clean and organized so do we. If the owner doesn’t mind or care or notice about the debri pile then neither will we. Again, its peer group stuff. While they are here they are aligning themselves to the Peck Household Peer Group.

complexity If you join a peer group of powerfully simple investors you will either change your behavior so you can belong to the group. Or you will leave the group. There isn’t a third choice with this one. And that is why the fifth step to the Fearless Wealth Approach is all about your peer group because this stuff matters. And no one is talking about it.

The stock market is complex, so is the economy, so is being human. BUT that doesn’t mean the solution is complicated. Many times complexity has a simple solution.

I bring up cryptocurrencies again this week, because when the investor commits to the William Occam way of investing. He is committing to noticing the simple solution. Allow powerfully simple to be in your life and there’s almost always a simple way to do it.

In Your Corner,

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RC Peck, CFP




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