A loved one passed away recently, leaving the rest of the family scrambling to deal with all of the things nobody is ever truly prepared for — funerals, estates, and caring for other family members affected by the loss. Everyone gets their turn eventually, but you’re never truly ready. It just happens, and you’re thrown in the deep end to sink or swim.
This particular family member had a lot of pets, and one of the responsibilities that fell on my brother and me was the job of rounding them up and taking them to a local adoption center to help them find new homes. Dealing with cute cuddly animals surely was more joyful than coping with the hard realities of death, so we happily took the job. Arriving at the home with a sense of purpose, we opened the door expecting a gaggle of furry creatures excited to be held and fed.
The dogs were naturally suspicious at first, but once the food came out they softened up and were as sweet as can be. A few belly rubs and a short ride later, and they were well cared for and ready for adoption.
And then there were the cats.
I’m a long-time animal lover, and I know cats can be a mixed bag. Some are ready to immediately colonize the first empty lap they see, others aggressively defend their territory, and many are skittish creatures that hide at the first noise. Well these were the latter run-and-hide variety and took cover the moment the door opened. As it turns out, that was a big problem.
I could see two eyes and a blue collar staring back at me from a distant corner, so we knew there was at least one cat. But the house was more cluttered than we expected, and with all of the excess stuff there were simply far too many places for others to hide. Combine that with the fact that we actually had no idea exactly how many pets we were looking for, and we were left wondering how on earth are we going to find and catch them all.
Surveying the situation and remembering a previous conversation with animal control, my brother had the smart idea to get some live animal traps, bait them with good food that a hungry pet couldn’t resist, and come back later to safely take them to a new home. “There’s no need to risk getting scratched up.” Wise words. So we set out plenty of food to hold them over, I made the long trip home, and he returned the next day with traps in tow.
A while later he called with an update. “The good news is that we caught a cat! The bad news is that it’s not the one we saw.” So there were definitely more, and our cat saga was only beginning.
Fast forward almost a week and six cats later, and we were at our wits’ end. Although we were confident at that point we had accounted for all of the animals, we knew that the cat we saw on day one was still in the house with a food source we didn’t know about and enough intelligence to evade our best efforts to corral him. It was cold and rainy outside, other funeral-related things were definitely weighing on everyone, and I had driven several hours to help handle the situation. Tired, weary, and impatient, we got more proactive.
We talked strategy, isolating the cat to one room and debating the best way to calmly get him under control. Then in an unexpected split second came the moment of truth. I saw him right in front of me within arm’s reach, and in that instant all of my best plans and good sense went out the window and I acted on pure instinct. I can’t pass up this opportunity!
In one swift motion I grabbed the cat, thrilled to finally have my personal white whale in-hand. Needless to say it didn’t work out the way I assumed, and just like that he bit my hand repeatedly like a frenzied serial killer going crazy with a knife. I reeled in pain, he took off yet again, and I retreated outside in defeat to tend to my wounds. One urgent care visit, two shots, three long hours driving home, and a full week of recovery later, and I’m finally able to type these words without pain.
That #&@$ cat!
Of course, it really wasn’t the cat’s fault. I should have known better. And the story does have a happy ending, as my brother was eventually successful in wrangling him without any additional drama. But it’s funny how the universe provides patterns if your eyes are open to them, and during my recovery week I found myself counseling someone (I’ll just call him George) on something more in my wheelhouse — investing — that nevertheless had me feeling a bit self-reflective.
George is relatively new to investing. He has dutifully taken advantage of his work 401k on auto-pilot, which is always a great decision. Recently he also took an interest in opening a brokerage account to purchase a few stocks. With stories flooding the news of small time investors making big money, he didn’t want to miss out. So he bought a few shares of companies that he heard about online and waited for his own riches to materialize. Now, just a few weeks later, he is concerned that the stocks he purchased lost substantial money and the experience is clearly causing him pain. He wants to know if he should cut his losses and buy something new.
Sound familiar? We’ve all been there at some point.
Naturally I explained the importance of diversification and patience in investing and suggested he look at a few broad index funds rather than dabbling in single stocks. But rather than scold him, I also pointed out that losing a little money on a relatively small stock purchase really isn’t such a bad thing for a new investor. After all, you get to experience the process of buying and selling, learn about important things like market and limit orders, and see first-hand how the markets work. Some lessons are best learned by just putting yourself out there, and the next time he selects an investment he’ll be better prepared to handle the situation with confidence and a proper sense of the risk involved.
And frankly, even as the resident “investing guy” I have enough self awareness to realize that I’m not in much position to lecture. Maybe it’s the pain killers talking, but I also can’t help but notice a parallel with my own situation.
Just like me chasing a strange cat, George is a responsible guy who didn’t gamble with his life savings right off the bat. He saw his financial goal in the distance, and based on the stories of others who bought the stock before him thought he had a good plan. But when the adrenaline kicked in and he took action out of fear of missing out, it turns out his investment was riskier than he realized and his stock purchase quickly bit him to the point where he couldn’t handle the pain and immediately let go. George just didn’t fully appreciate what he was getting into. And neither did I. But today we’re both smarter for the experience and know better than to repeat the same mistakes.
So if you’re also new to investing and eager to take the plunge, here’s my own life lesson that I share today so that you hopefully won’t have to learn it the hard way like I did:
Never grab a strange cat.
I mean that both literally and figuratively. The most loving animals in normal times may not react the way you expect under stress, and the most desirable investment may still experience significant losses once you personally put your own money on the line. And importantly, even the best references don’t make a bit of difference. The loved family cat just may not know you at all, and the popular stock touted by others may not behave the same way on your personal timeframe.
So framing the same concept in financial terms:
Never invest in something you don’t understand.
Whenever you make an investing decision, don’t simply assume that because it was suitable for others it will also be suitable for you. Really understand what you’re getting into before you buy. Research the portfolio and learn how it works. Quantify the worst-case scenario and plan accordingly. Take your time. Never act impulsively, even when it looks straightforward in the moment. Outline your strategy and stick to it.
If I had done those things a few days ago I would have saved myself a lot of pain, and if George would have done the same with his investments perhaps he wouldn’t be tending to his own wounds. Both events are minor in the grand scheme of things, but that’s also what makes them good life lessons.
Now if you’ll excuse me, I have my own cat clearly eyeing my lap. So to be clear, it’s not about avoiding the game but about playing it smartly.
Choosing the right portfolio is like finding the right pet with the personality that matches your own. Mess it up and it can come back to bite you. But take the time to do it right, and rather than spending your waking hours grasping at anxious financial cats backed into a corner you’ll be able to sit back, relax, and watch your close family pet purr in the sunshine.
I know which one I’d choose! What about you?
Coffees are always nice, but if you only have a few dollars to spare consider donating to a local animal shelter. They’re great people doing a wonderful service.