A little while back, I found myself in an Uber, when the driver began to share his political views. Before too long, it became clear that his point of view was well outside the norm. For example, he explained that the Federal Reserve Bank is not a government entity, as most people believe. Rather, it is privately owned by the Rothschild family. In addition, he said, the Rothschilds also control the president—not just this president, but the presidency in general. The Command-in-Chief, he said, is just a puppet for the Rothschilds.
Recognizing the absurdity of these statements, I gently suggested he double check his facts. But he saw no need. “I have checked this information many, many times, my friend.” Clearly, he was getting his information from less-than-reliable sources, but sadly, he showed no interest in contrary opinions.
To be sure, this is an extreme case. When it comes to investments, though, it’s not unusual to find yourself caught in the cross-currents of information and mis-information. How can you avoid this? Below are nine ways to help validate your investment choices:
1. Share your portfolio with a friend. For most people, money is a private topic. And yet, we could all benefit from another set of eyes on our finances. This is especially true if you manage your own investments. One way to do this while still preserving your privacy: Make a photocopy of your account statement and simply cut off the “market value” column before sharing it with others. While this isn’t perfect—since the weighting of each investment is also important—you can still learn a lot by discussing what you own.
2. Share your portfolio on the Bogleheads forum. Named in honor of Vanguard founder Jack Bogle, this online community is a vibrant gathering place for devotees of Mr. Bogle’s philosophy. This group is like no other. So dedicated are they to spreading the gospel of simplicity and low cost, that they are happy to review others’ investment portfolios at no cost, just to be helpful. To get started, head to www.bogleheads.org/forum.
3. Call Jill. One of the deans of personal finance, Jill Schlesinger hosts a twice-weekly radio show called “Jill on Money.” On this show—which is also available as a podcast—Schlesinger takes calls from listeners and does a remarkably good job pinpointing key issues.
4. If you work with an advisor, ask a question you may not have asked before. Ask for an explanation of the philosophy that drives his or her thinking and how they translated that thinking into the portfolio you hold. When your advisor answers this question, ask yourself: Does this sound like evidence-based logic or superficial sales-speak?
5. Listen to this set of incredibly useful and enjoyable videos produced by University of California professor Terrance Odean. Together with colleague Brad Barber, Odean is famous for a series of studies in which he evaluated the collective track record of individual investors. If there’s anyone who understands where investors tend to go off track, it’s Odean.
6. Call your accountant. At this time of year, after April 15th, CPAs have much more time in their schedule. A useful exercise: Make an appointment to meet in person. Bring your 2018 tax return and ask your accountant to comment on the tax-efficiency of your investments. This will accomplish two things. Of course, you should be interested in specific tax-saving recommendations. But more importantly, this may help you evaluate the overall quality of your investments. In my experience, tax-inefficiency is often a sign of a generally low-quality portfolio. This isn’t an ironclad rule, but if your CPA has reservations about your portfolio, you may want to scrutinize it further.
7. Pick up a publication you don’t normally read. If you typically read the New York Times, check out what the Wall Street Journal has to say, or vice versa. You could also pick up a copy of Money or Kipligner’s, two venerable personal finance magazines. Do I agree with everything they say? Hardly. But it’s a good exercise to expose your thinking to new ideas.
8. Read a blog post titled “150 Portfolios Better Than Yours” on the White Coat Investor website. This article is a tour de force and illustrates literally 150 smart ways to build a portfolio. If your portfolio differs markedly from all of these, that’s a sign that you may want to bring in another set of eyes.
9. Watch this video of blogger J.L. Collins speaking to an audience at Google headquarters. Collins is not your typical financial writer. His blog actually started as a series of letters to his young adult daughter. Over time, Collins has developed a well-earned reputation as a keen thinker and straight-shooter. If you like this video, you might also enjoy Collins’s book. (Or, if you want the short version and don’t mind a heavy dose of profanity—and I mean heavy—Collins has condensed his no-nonsense advice into this whimsical, one-minute video.)
10. Hire a by-the-hour investment advisor to review your portfolio. I do that as part of my advisory business—as do others. Two hourly advisors I respect: Rick Ferri and Allan Roth. You can also search Garrett Planning Network’s website for hourly advisors.
As for that Uber driver, I’m not sure what it will take to disabuse him of his notions. But I hope these recommendations provide useful new perspectives on your portfolio.