Swing for the fences investing is a pretty well established term, see for yourself at Investopedia. In my experience, swing for the fences investing not only involves bold, speculative bets, but doing so without any regard for the “R” word….risk. It is pure insanity to invest without assessing your risk tolerance, the upside vs. downside risk, mitigating that risk, and so on.
In my 9 to 5 job, I’ve worked with someone that has been a classic swing for the fences investor. We’d go out to lunch often, meeting at the elevators. Here’s how it’d typically go down:
Me – Walking towards the elevator bank.
Jim Bob – staring down at his phone, not even looking up when I walk over. He knows I’m there and says
Goddam [fill in the blank stock here], should have bought it when it was $5 a share, now it’s $40.
Or
Goddam [fill in the blank stock here], should have sold it when it was $40, now it’s $5.
Jim Bob isn’t his real name, but you get the idea. Jim Bob is the classic swing for the fences investor. No principles, no plan, no coverage of downside risk, not even an idea on what his retirement number. We’d go out to lunch all the time, I’d always hear the same things out of his mouth, and yet he’d never get it.
This is also the same person that would criticize me when he learns of my boring investments. It’s a classic example of someone that does not have a financial plan or the wherewithal to visualize how and when they will retire. They just have this notion that they have to make the most possible money the can by swinging for the fences.
In my experience…
I shouldn’t cast too much shade on Jim Bob though. I was also a swing for the fences investor in my 20’s and 30’s. When I was say 26, if someone were to ask me: how much do you need to save to retire? I would have probably answered: I don’t know, but I do know it’s a lot more money than I have now. That mindset resulted in me thinking that I had to make the biggest returns possible to have any chance to retire. Of course I was also making other mistakes such as not tracking my spending.
Financial Plan
Your financial plan will dictate how and when you invest. It consist of deliberate, well thought out steps to attain financial freedom. Just remember if someone tries to sell you on some investment. Did they ask about your financial plan? If they don’t seek to understand first, then they are not looking out for your best interests.
Risk
Understanding and accounting for risk is something common between professional gamblers and money managers. Professional money managers don’t go all in on a stock based on a random hot tip. Professional gamblers don’t wander the casino floor and plunk down random amounts of cash on the roulette wheel. They both know their game, develop a plan on how to cover their downside risk, and make thoughtful deliberate decisions.
If you can’t get your mind off this topic….
If you still have the urge to “swing for the fences”. Think about this….maybe the stock market is not the right place for you to swing for the fences, maybe it’s yourself. In other words, if you have the energy and urge to go for it, then invest in yourself, start a business, start a blog and dive in head first. Be smart about it of course, but at least you’ll be in control. It’s better than putting your money in some investment you have no control over and are likely to lose.
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