Latest / The Chiro Money Show / 022 | The 6 Principles Guiding Our Investment Decisions
Transcript
- Chris: Welcome back to the Money Show, where we help Chiropractors make better financial decisions so they can build stability in their finances and a lifestyle that they love. ⁓ We're your hosts, Chris and Scott Campbell with Align Wealth. ⁓ Welcome back. Scott: How we doing today, Chris? Chris: Doing good, Doing good. Yeah. Scott: Good. Yeah, it's been a busy stretch. Chris: Yeah, we're almost over, almost through it. Scott: We've had a really busy four or five weeks of what we refer to as our winter meeting with all of our clients. have these meetings throughout the year and we happen to be in a heavy meeting season that we're, ⁓ lights at the end of the tunnel. Not that that's a bad thing, but getting everyone through that process, it's always great because you get to check in with all the clients. ⁓ They things on their mind that they wanna talk about and. It just brings up great discussions and great questions. And a recent discussion from a meeting we had a couple of days ago sparked the idea for the topic that we're going to dive into today. Chris: Yep, it sure did. Yep. It's been busy, but awesome. We love seeing everybody and having this kind of surge style meeting calendar and schedule, but it does make for some busy months. yeah. I'll jump right in and share the story that we'll dissect and ⁓ kind base the conversation on today. client we were meeting with. fairly, I would say advanced, experienced investor, ⁓ investing for a while, quite an established net worth. ⁓ they beyond ⁓ awesome, balanced, ⁓ boring ⁓ that everything we want it to do. ⁓ They wanted take on ⁓ a bit of exposure to some other ⁓ alternative classes. In this case, were talking about gold and Bitcoin specifically. Whatever those things are, I don't think it really matters. This could be used a discussion against buying an individual stock or ⁓ like that. ⁓ really matter. Scott: Yeah, we're not here to debate gold and bitcoin today. They just happened. Chris: We're not getting into, are not getting into Bitcoin. That is for sure. ⁓ for today. Anyways, question about, ⁓ how much should I have? ⁓ And I to, client wanted to basically make a decision based on ⁓ what had happened ⁓ And... ⁓ Scott: No, not today. Chris: We kind of pushed back a little bit and back to a previous conversation we had had with them where we had ⁓ we thought we had established a solid framework of like how much exposure to these alternative assets that we wanted to have. in the mind maybe it wasn't as clear cut. And so ⁓ essentially they using their... Yeah, their, their logic to try to make the best decision in that moment. whereas we were trying to refer back to the framework, the decision-making framework that would guide the decisions on how and why we're invested. And was really interesting. So going through this, was like, well, we of on our, our key philosophies and beliefs, ⁓ principles around that our, our investment philosophy ⁓ guide how we. Yeah. Scott: which we're gonna get into today. We're gonna go through what our guiding principles, we call them our guiding principles to a philosophy around investing. think it's important, we're gonna get into why having an actual philosophy and almost like a mandate of how and why you're invested is so important for a successful investment journey. ⁓ Chris: Thank ⁓ Totally, ⁓ Excited dive into those. So we did a quick, at the beginning of this meeting with the client, we did a quick review on those and we're like, we remember these, still believe these, ⁓ we're all in that like, this is what drives us. This is and why we invest. Everybody's like, yep, two thumbs up, let's go. And then 20 minutes later, we're talking about Bitcoin and and increasing our exposure. And we're like, hold on, wait a second. Does this... still hold true the six guiding principles that we just discussed. ⁓ that ⁓ drove us to the point of ⁓ a collective decision that we a ⁓ clear mandate ⁓ of and why we're invested so that can refer back to it. ⁓ I think especially needed. I think everybody should have this, ⁓ but especially cases like this where there is Scott: Yep. Chris: There's something beyond the normal happening. to refresh everybody, our normal ⁓ the boring, balanced, globally diversified, owning 15,000 stocks ⁓ the world. That's the boring, that's what everybody should have, we believe, as a starting point for their investment journey. we want to get fancy along the way and ⁓ ⁓ say play maybe, with 3 to 5 % or less ⁓ your total invested assets. Maybe want to do something sexy with because you're bored ⁓ or because believe something ⁓ about the Scott: Yeah. Whether that's Bitcoin or holding commodities like gold or silver or having a little self-directed account where you want to have some play money where you individually pick, buy and sell individual stocks. We've talked about some on previous episodes. if someone wants to take like you're referencing maybe 5 % of their portfolio and, ⁓ go some speculative investments. think that's okay. Like we all have different desires around investing about what we want to do. Some of our clients are like, I could care less. I do not want to do any of that. Like let's just buy the, the global diversified portfolio and said, and forget it. We'll focus our time on the things that do matter. Running my practice, living life, you know, that kind of thing. But we do have clients where it's like, okay, if that's something that's important to you, let's factor that in. If it's only 5 % of your portfolio and say it's Bitcoin, for example, if it does go to zero, we know the rest of your financial plan is going to be intact. the story got interesting with this particular client was like, all right, if we're agreeing on maybe a 5 % exposure to Bitcoin, happens ⁓ when, we're not trying to debate whether it could be any asset class, but let's. talk about what happens if Bitcoin goes, call it to the moon, and the value of Bitcoin goes up 10x in the next year. Inherently, that means that your exposure is gonna potentially go from 5 % to 12 or 13 or 15 % potentially, right? 20%, doesn't matter. That's where the... Chris: 20%, 30%, who knows? Yeah. What do you do then? Scott: That's where the conversation with this client got interesting. he was saying, well, I view Bitcoin and gold a little bit differently than the rest of my investments. It's a hedge towards certain things. Government's printing money like crazy, yada yada. Like all these different things of the reason why he might view those assets differently than the rest of his portfolio. Well, the question then we kind of posed was, well, what happens if goes to, if Bitcoin's now making up 30 % of your portfolio? Today you say 5 % exposure is fine, but what happens when it goes to Is there going to be some sort of rule of thumb or a mandate or a guideline to say well if the portfolio if that part of my portfolio goes up I need to rebalance or get back to my Mandated guidelines of being at 5 % and that's where he had some interesting. We had some interesting conversation around Well, I don't think I would sell I don't think I'd go back down to 5 % necessarily Maybe I'd take the money that I invested initially and take that off the table and get back down to maybe 13 or 14 The key word that I'm putting in there, Chris, is maybe I'll do that. If it goes really low, I don't know if I would sell more of my portfolio to get it up from 1 % back to 5%. This is where we started to be like, well, we're going completely against some of our guiding principles that initially you said like, yeah, this all makes a lot of logical and rational sense for having a mandate around how and why we're investing. Chris: 100%. We to keep in mind that when refer to investing, we are always speaking about long-term ⁓ investing your ⁓ financial ⁓ long-term. It's you in those work optional years for maybe 30, 40 years. ⁓ Even close to retirement still has a 40-year investment time horizon. A young starting out probably has an 80-year time horizon, maybe, if they're 20 now. The principle that I love that you brought it back to in that conversation was, if you're happy with 5 % now, 5 % is the goal ⁓ why we ever change from that? Why would we ever deviate from that? Scott: Exactly. the point that we're trying to drill home in this case. We to take the maybe out of it. We want to take the guesswork out of it. ⁓ We should gears to these mandates and these principles that will help shape, maybe we come back to the story here and tie this all together here at the end. ⁓ Maybe we shift gears ⁓ and through ⁓ what six guiding principles are around investing. Chris: Let's do it. Why don't you jump in? Yeah. Okay, you do the first one there, Scott. Scott: First one is market timing. We are never going to tell our clients when to get in or out of the market, either as a whole or try to time when to get in or out of certain sectors or countries or asset classes. We believe time in the market is so much more valuable than time in the market. We've talked about this on previous episodes for sure, but... Chris: you Scott: Trying to guess when to get in and when to get out, it's a fool's game. No one can do it consistently and get it right over long periods of time. You might get it right once. you said, someone's time horizon could be somewhere between 30 and 70 years. Do have faith that we can time the market on the tops and bottoms? If it was that easy, everyone would do it. But there's a lot of evidence to say that ⁓ can't be done, so let's just get in the market, set it, and forget it. Chris: Yeah, it's so interesting. Like, it's like, why do we lose common sense when all of a sudden we're talking about investing? Because I think inherently we all know and believe that no one can successfully predict the future. That's what market timing is trying to do. You're trying to predict the future. So if you believe that you can market time, Well, you should be a billionaire. If you can predict the future, what do you need to invest for? You should have everything you could ever desire. But we know that people can't predict the future. why would we try? Diving into the next one here, ⁓ two, ⁓ number two, global diversification. Yeah, there's ⁓ probably more important than this. the world market is up, is made up ⁓ of ⁓ many countries. So here we're Canada, Canada makes up about % of the world's market. If you're investing only in Canadian companies, you're missing out on exposure to 97 % of what's happening out there. And we don't have to look far. We can look just across the border to our neighbours to the south and their economy, their stock market is built up of completely different companies and sectors and assets that we don't have access to. They have a huge amount of private healthcare, companies that people invest in. ⁓ have so much oil and gas and banks. Scott: Mm-hmm. Chris: That's what makes up Canada's stock market, but you go other places and you get access to different things. so ⁓ that access across the globe and many companies as we can, ⁓ that's principle two, global diversification. ⁓ Scott: Yep, for sure. Only thing I'll add to that, and the reason why we want that diversification is that country, companies around the world based in different countries, they perform differently at different times. In recent history, the US stock market has done exceptionally well over this last decade. There was a period of time in the 2000s where it was the Canadian stock market where people were like, I don't want to invest anywhere else aside from Canada. Right. And that's kind of been the trend with with US. But then if you just look back at recently this last last year in 2025, it's been it was the Canadian stock market who had an exceptional year. So we're not trying to guess and use recency and history like recent history to say that's going to guide our decisions of how we're going to invest from a global diversified standpoint. point here moving forward because we need to understand that it's going to have like there's going to be these ebbs and flows in terms of what countries and what sectors and what asset classes are to generate returns over the decades ahead. So let's just ⁓ it all in a big diversified basket. All right, what do we got for point three, Chris? Chris: Keep cost low. Scott: Why is that important? Chris: Well, fees, ⁓ compound just like returns do, right? if we're consistently paying too high investment management fees, that's eating away at our returns year over year. ⁓ And we've established market timing and predicting future is a fool's errand. So we don't need to Scott: Yep. Chris: an active manager to try to do that, fool's errand. We should just have an active, ⁓ that style of active approach, ⁓ typically lowers our fees considerably, just going from ⁓ active to a more passive approach. ⁓ Scott: Yep, and as a refresher here, why people typically would pay a higher fee, two, upwards of 3 % in some cases in terms of a fee on the fund that they're invested into is that typically that higher fee is correlated with paying a fund management team to ⁓ try and buy sell the different stocks with inside a fund to outperform the broader market. But there's so much evidence to say over long periods of time, 10, 20 years, the odds of someone trying to actively manage a fund and outperform the broad market, it's a losing game. The stats are close to 95 % of the time the passive, boring approach is going to outperform an active manager. Those odds aren't great, right? There's no problem with paying a higher fee if you're gonna get good value and there's gonna be consistency that yeah, I'd pay a 2 % fee if the evidence share is supported that I can get a higher expected rate of return by doing such, but that's not the case. Chris: Yeah, unfortunately that's not the case. If you could pay a higher fee and guarantee a higher return, I think everybody would sign up for that. But is simply no one out there that can guarantee a return. yeah, that be a red flag. If you ever hear that, if any of our listeners ever hear that, someone trying to guarantee a return, like ⁓ you turn and run. ⁓ Okay, one, my favorite one. Faith in future. ⁓ Scott: Sure. Yep, for sure. Chris: I mean, I think this is intuitive in some ways. Like if we are not optimistic about the state of our world and what we have looking ahead of us, it's pretty hard to be a long-term investor. And... That can be hard actually though, in a lot of cases. If we're watching the news and following the media and what's happening in the world, there's so much doom and gloom and negative publicity the world. Not in ⁓ financial but ⁓ everything, But what, so much pessimism, always, anytime in history, ⁓ right? what like to think about with Faith in the Future is... Scott: Yeah, a lot of pessimism out there right now. Yep. Chris: If we are long term investor, are invested in companies. Stocks just a fancy word for companies. Companies exist provide a product or service to a consumer like you and I and ⁓ they hoping make profit in doing so. If you are a shareholder, shares, stocks ⁓ in that you will be with some of those, ⁓ share in that profit. Scott: Yep. Chris: Despite our currency concerns about printing money, despite our global wars or political agendas or whatever, you believe ⁓ ⁓ people across the world will continue to be innovative, ⁓ in nature, provide ⁓ build companies that provide products and services to consumers and reward their shareholders? ⁓ I I believe in that. I find hard to find a world where that wouldn't happen. ⁓ Scott: even when even the scariest of times, right? COVID happens, pandemic hits. If you step back, like, sure, this is like, it's hard. hard in the moment. There's a lot of headlines in the news. It's scary. People are getting sick. Like going back to that time, for example, there's uncertainty and it's hard to discount uncertainty. But if you could step back and say like, yeah, like you said, Chris: Totally. Scott: Do I have faith that we as mankind will get through this scary scenario? We will innovate and get through this. We'll find a vaccination or whatever the case is. Like we'll get through this, right? People will continue to show up at their businesses, provide that good or service for a profit. It might not look great at the moment, but long-term things will turn back around, right? Chris: Yeah, and that's exactly what happened during COVID is everybody went out and innovated. The world changed as we know it. It was scary, but if you stayed invested throughout that man, you were handsomely rewarded. Scott: Yeah, quite quickly. Exactly. Yeah. For sure. Things, the world changed. Things were, like you said, innovation happened, you know, the stock price of, ⁓ of zoom went up and Peloton and these other, other things that skyrocketed during the, during that pandemic time timeframe. But Chris: I'm sure glad I was focused on that and not buying toilet paper. Scott: Absolutely, sure, for sure. Yeah. All next we got, next principle is such a big one. And ⁓ I've circled this back to this conversation that we had with this particular client, and that's just tuning out the noise. We are inundated, like you said, with primarily bad primarily it's very pessimistic in terms of what's in the headlines. You know, I think back, like we talked about, this time last year in 2025, February, March, April, so much uncertainty, so many negative headlines out there that made you think that you need to do something with your long-term investment portfolio. There's action that I need to take, And I'm sure there's a lot of people who took action and regret that action because 2025 turned out to be a pretty positive year in the markets overall, Again, it's so hard, like it's all hindsight. There's uncertainty, there's these negative headlines, you feel like you need to do something to take action. ⁓ harder said than done. But ignoring those headlines and not even letting them come ⁓ your feed is probably a good place to start. Would you agree? Yeah. Chris: Yeah, definitely, definitely. I think these last two are so connected, Faith in the future tuning out the noise, like, they're kind of... Yeah, like if you're on top of the latest news, that's so of that news ⁓ and what's in the world is gonna be at direct odds with maintaining faith in the future. So it's important tune that out. And I think that actually reflecting back to this client conversation, like I think when we reviewed these two things specifically, ⁓ I think kind our client opened up their to this in a new way ⁓ just thought like, yeah, I know there's worries, I know there's concerns, but ⁓ right, I'm back to the tried and tested and true, ⁓ invest companies, globally diversified, faith in future. ⁓ If, ⁓ and whatever Bitcoin ⁓ is ⁓ future. you've got some exposure. Great. Scott: Yeah, for sure, for sure. the last one, Chris? Chris: Last one, probably most important one, managing our behaviors. probably the hardest one too. ⁓ ⁓ do we respond or do we respond or react ⁓ inevitably things get scary? ⁓ that will happen. Things will get scary. That's mostly related to market corrections or crashes. Scott: Mm-hmm. Yep. Yep. Chris: We know that those are inevitable. That's a healthy part of the economy, the economic cycle, of the stock market. you're a long-term investor, can you should ⁓ to go ⁓ many crashes in your journey. ⁓ Scott: Mm. Chris: If what was the stat I'm trying to remember Scott, but I want to say something like you're invested for 50 years you're gonna on average see about six or seven crashes. ⁓ that about right? ⁓ Scott: Yep, at least, Typically every five, six, seven years, like that, that's just based on averages over history. But yeah, you're gonna go through six, seven, or eight potential major market downturns over a 50 to 60 year investment journey, easily. Right? Chris: So it's how we respond when that happens that is gonna have the biggest impact on your personal rate of return. Because you can be in the best portfolio, balanced, diversified, the right exposure, but you can make one wrong decision and that can cost you 40 % return. Scott: for sure. Yeah. Yeah, for sure. And the flip side goes to like when things get really, really good or get very, very excited about, know, are doing great or a certain type of sector or investments doing really well. ⁓ get the old brother-in-law in the ear saying that you need to invest into XYZ because everyone's doing well and you have FOMO, you don't want to be left behind and be the who didn't invest into that particular, I don't know, pharmaceutical company that... ⁓ that you ought to be invested into because they're doing big things and goes part in hand with like just tune out that noise ⁓ then manage the behavior being like thanks brother-in-law I appreciate the advice but ⁓ luck to you. Chris: Yeah, yeah. It's like we're almost meshing a couple client stories here now. had another ⁓ recently that ⁓ client had ⁓ a single stock holding for quite a long time and it was just the advice of family ⁓ and and all, few of his family ⁓ all invested this one company. Scott: for sure. There we've been. Mm-hmm. Chris: And yeah, it was, was never in his mind any reason to sell because what if ⁓ went ⁓ and he was the only one that didn't have it. But interestingly in our meeting with him, we were talking about future goals and plans and aspirations and he ⁓ had this, future goal he shared with us. In this case it was acquiring like a camper van, like a pretty fancy camper van and being able to kind of live out of that and a lot of time outdoors. like, I the way you posed the question Scott just like ⁓ crushed ⁓ because were like, would you have a few shares this silly, whatever this is, company or would you rather have camper van? It's like, damn. Scott: Yeah. Chris: Yeah, this is stupid. I wa- Scott: What's gonna bring you more joy? Are we living life to hold a couple shares in a pharmaceutical company that might generate you a great return? If it did, great. Like, is that gonna make a huge, you know, is it gonna change your life? Probably not. I sure know that campervan's gonna change your life. The memories and experiences that you're gonna have with your family in it, like, it's like, sell the stock, dude, go buy the campervan. You're gonna get a lot of fulfillment out of it. ⁓ Chris: Yeah. He came back three days later and was like, yeah, I'm ready to sell. Yeah. Yeah, it's good stuff. Scott: That's right. That's right. Yeah. Yeah. I think, you know, going back to our initial story with that client and why we thought we'd weave in these principles in this conversation today is that At the end of the day, need to have a philosophy. We need to have almost like a mandate. almost thinking like, a reason to have your philosophy and your mandate written down? Like you write down, here's how and why I'm invested the way I am, so that when things go crazy, good or bad, or things come up, like I want to invest more into Bitcoin or gold or into Nvidia, whatever. you can reflect back to why you started your investment journey to begin with, and is there good enough reason to shift away from that mandate, right? Chris: don't need it in writing until you need it in writing and that point it's too late ⁓ No, too late at that point right it's it's the same as ⁓ having a state documents in place it's like and insurance place The time to them is when you don't need them when you're sound mind when you're making you Scott: That's right. You can't put it at writing at that point. Chris: when you're just kind of at the right stage to make an educated decision, that's when you need to do these things. Not when exactly, not emotional, a rational decision. Scott: Yeah, not an emotional decision. Yeah, for sure. Yeah, yeah, we're all rational human beings until someone happens, then we go crazy. It's part of, it's just natural human tendencies, right? So yeah, that's, ⁓ I think it was a great reminder for that particular client to kind of be like, all right, well, if you believe in these principles, this makes rational sense now, then let's apply these same principles, not only to our... Chris: Yeah. For sure. Scott: globally diversified portfolio, but also let's find a mandate around, all right, if you want to own a little bit of Bitcoin or gold, great, let's support you in that. Let's make sure that it's a reasonable amount from our standpoint, from a big picture planning standpoint. But hey, if Bitcoin goes through the roof. We wanna tune out the noise, we wanna manage our behaviors, we don't want guesswork and maybes to come into play here. We can just say, right, well, December 31st of each year, I'm gonna look at my Bitcoin exposure. If it's gone up from 5 % to 9%, I'm gonna sell some of my Bitcoin to get back down to my 5 % mandate. Zero emotion, move on with my life, carry on. That's the outcome. Chris: balance. Doesn't require you to watch the price of Bitcoin every day for the full year. Maybe. Yeah. I think, like you said, think to kind of wrap up or as we get close here, like question I would pose our listeners is, ⁓ do have an investment philosophy? ⁓ First all. ⁓ Scott: sure. He still will. He still will. Maybe. Yeah. Chris: Do you have something that you believe in that you can clearly, communicate? It be simple. It should be easy to communicate. ⁓ That's you gotta start with. Can you it down? ⁓ That might hard, ⁓ but ⁓ if ⁓ is simple, it ideally should be, you should be able to write it down. And then, ⁓ yeah, is it ⁓ Is it something you can reflect back on? ⁓ Yeah, it could over time. ⁓ Scott: Mm-hmm. Chris: Maybe there's different iterations of it and you update it annually or five years or something, but ultimately. Scott: but you're probably doing those updates and those changes with maybe new but from a standpoint that you're making a rational, logical decision to say, there's a good reason to change my mandate for the following five, 10 years, for example, rather than like an emotional reactionary mandate change based on headlines. Chris: Yeah. I would argue that if there were to be changes to the mandate, would often than not be due to personal circumstances changing ⁓ market conditions changing. ⁓ you're changing your mandate because of news or market, ⁓ don't have a strong enough mandate. ⁓ if your life changes, ⁓ sell a company, ⁓ ⁓ kids, Scott: Mm-hmm. Yep. I agree. I agree. Yeah. Chris: Separation who knows what happens right those could be reasons that your mandate changes, maybe Scott: Mm-hmm. Or you go through a major market downturn and realize, I don't have the risk tolerance that I thought I had ⁓ I first set out on this mandate. I think I need to dial wrist tolerance down a notch because what I thought I could handle is not actually the case. ⁓ And versa. ⁓ Cool. Chris: Maybe vice versa, maybe you go through one and you're like, okay, now I know what this is like, let's ratchet it up, let's go. ⁓ Scott: sure. Any other points you want to hit on? Chris: I just can't believe you haven't mentioned the hat yet. Scott: 607 and chill? Insider. Chris: Yeah, kind of an inside joke. I don't know how much we want to get into that, ⁓ Scott: That's for clients only. I do have a pretty sick of Align Wealth hoodie on now though, so that's pretty sweet. Chris: Okay, we'll leave it there. can send us direct questions if you're curious about that. ⁓ true. ⁓ getting some swag. ⁓ Scott: That's right, represent. We need more blue in our lives, right? Yeah. All right. Chris: That's right. love it. was great. ⁓ wrap it here. ⁓ Scott: Wrap it there? Sounds good. See you next week. Adios. Chris: See you guys next week. Thanks for listening.