The world is opening back up. Our calendars are already packed with social activities for the summer (my bad, Dan). With all the socializing you have to catch up on, one thing’s for sure: someone will bring up their investments this summer. That’s not a bad thing. I believe our world should incorporate money conversations in our social circles. The problem is that when someone does (we’ll refer to that someone as “Neighbor Bill” throughout this blog) they typically only share a portion of what’s really going on. But, I digress. This article isn’t addressing that issue, instead, we want to prepare you for how to talk stocks (or any other investment) this summer. Whether it’s your neighbor, uncle, or that weird guy at the dog park, this blog will leave you feeling more confident when the conversation presents itself.
Conversations with non-financial professionals concerning investments happen all the time. I find that those who listen to the conversation fall in one of three camps: intrigued, disinterested, or annoyed. Each perspective can be helpful and hurtful. Intrigued individuals may implement the “advice” leading to a beneficial or undesired outcome. The disinterested may find a more suitable conversation elsewhere while missing out on the opportunity to learn. Finally, annoyed people may shut down an inconsequential conversation while developing a distaste for any public conversation around money.
Regardless of where you stand, you may find value in actively listening to Neighbor Bill while he speaks about how awesome his portfolio is doing. I have learned a lot over the years participating in these conversations. Especially with our clients. We’re fortunate to have extremely smart clients, and I hope they learn from us as much as we learn from them. By giving our clients space to educate us, we’ve learned about the interworkings of NFTs (non-fungible tokens), the inhumane labor with Chinese solar panel factories, and how 401(k) Plans can now invest in private equity funds. All that from listening. However, just like in any scenario, the information you are being dealt with isn’t always accurate. The best way to divulge the topic further is to ask questions.
Asking questions shows interest, and as a naturally selfish species, we might forget this very important step in a conversation. For instance, according to an article by Harvard Business Review, people may reframe from asking questions because they are egocentric. Here’s a quick example: “Jill just started talking about how her Coinbase portfolio is rockin’ and rolling. I’m going to sit here acting like I’m listening. Once an opportune moment to interpret her comes my way, I’ll talk about my genius overweight to energy stocks this year.”
When someone starts a conversation regarding their successful investments, that’s typically the point of the conversation. If they want to learn about your strategy, they’ll ask you (we’ll get to that later). Therefore, if we know the point of the conversation, then keep it there by asking questions. I usually pick one of two routes for my questions. The first route (and most common) I choose is education (A.K.A. - I want to learn more!). When I’m feeling a little mischievous, the other route I go is debunking the person’s strategy. Let’s focus on the former.
Neighbor Bill: “Have you been investing lately? I put money in Crocs, AMC, and an energy ETF and they are just soaring.”
You: “Wow, that’s excellent. How did you know to invest in them?”
Neighbor Bill: “I just knew things were hit harder than necessary, and that they would rebound significantly when things started opening up. Some of it was luck, and some of it was working off an educated guess.”
You: “What’s been your favorite to track?”
Neighbor Bill: Obviously AMC. Who doesn’t love a good underdog story? I bought in February determined to hold on, at least until the world opened up again. Now, look at it!
You: “What’s happening now?”
As you can assume, Neighbor Bill is elated to share how AMC went from ~$12/share in May 2021 to now ~$50/share one month later. Through an eager-to-learn mindset, you may have picked up on a thing or two about Neighbor Bill and what’s currently trending in the marketplace. This curiosity has served me well in my years. However, there comes a time and a place where my desire to learn from someone is trumped by the fact that the person is full of crap. When that’s the case, I tend to ask one question, and one question only:
‘Why’ is a powerful question. You may have heard the power of asking why seven times. The conversation would have looked much different with Neighbor Bill if you simply asked ‘why’. Why did you invest in those? Why do you still hold onto them? Why do you think they will still benefit your portfolio? Why not invest in other holdings?... you can see where I am going with this.
The difficulty with asking ‘why’ is people can feel like they’re being attacked. Tread lightly. However, if someone has legitimate answers to questions that start with ‘why,’ then it should only create more confidence for both parties in the conversation. According to Simon Sinek’s book, Start with Why, the greatest communicators start this way. It’s a powerful tool for any conversation, with others or yourself.
First off, take it as a compliment. They likely started bragging about their portfolio to boast about their accomplishments. If the conversation shifts focus from them to you, Neighbor Bill has indicated that he wants to learn from you. Look at you go, smartypants! Asking questions leads to likability and intelligence, two traits an active listener portrays rather quickly at a summer BBQ.
There will be questions you know, and questions you don’t. I can’t give you all the answers because I don’t have them all. That’s the key takeaway here. Telling someone, “I don’t have that answer,” is one of the smartest responses you can give. Knowing what you know, and what you don’t, is a powerful thing. TED Talk speaker Derek Sivers stated, “Being stupid means avoiding thinking [and] jumping to conclusions. Jumping to a conclusion is like quitting a game: you lose by default. That's why saying "I don't know" is usually smart because it's refusing to jump to a conclusion.” Being certain of uncertainty is a confidence I see in few people.
Pack up your coolers and put on your bucket hat because you are ready for whatever conversation comes your way. When someone brings up investments this summer, welcome it! There will likely be something to be learned, don’t forget to ask questions, and soak up the compliment for when you get asked to speak about your strategy.
When you get sick of talking to Neighbor Bill about investments, give us a ring. We will gladly provide you more pointers to equip you as your calendar continues to fill up.
Disclaimer: This article is for informational purposes only and is not a recommendation of Fyooz Financial Planning, Natalie Slagle CFP®, or Daniel Slagle CFP®. Past performance may not be indicative of future results and may have been impacted by events and economic conditions that will not prevail in the future. Therefore, it should not be assumed that future performance of any specific security, investment product or investment strategy referenced in the article, either directly or indirectly, will be profitable or equal to the corresponding indicated performance level(s). No portion of the article shall be construed as a solicitation to buy or sell any specific security or investment product or to engage in any particular investment or financial planning strategy. Any reference to a market index is included for illustrative purposes only, as it is not possible to directly invest in an index. Indices are unmanaged, hypothetical vehicles that serve as market indicators and do not account for the deduction of management fees or transaction costs generally associated with investable products, which otherwise have the effect of reducing the performance of an actual investment portfolio.