Why most investments are not “battle tested”

Behold! An investment lesson from the 24th Century show, Star Trek: The Next Generation…

Data: In the game of military brinksmanship, individual physical prowess is less important than the perception of the species as a whole. For over 9 millennia, potential foes have regarded the Zakdorns as having the greatest innately strategic minds in the galaxy.

Worf: So, no one is willing to test that perception in combat?

Data: Exactly. 

Worf: Then, the reputation means nothing.

— Star Trek, TGN

Years ago, I read a research paper by a professor Hendrik Bessembinder which was about how only 4% of all tradable stocks are responsible for 100% of the net profits investors get from the stock market. 

Here’s the rub:

The 4% changes over time. 

Yesterday’s winners are not today’s winners. And, today’s winners will not be tomorrow’s winners. 

But, if you watch the main media’s reporting of investing, you’d think it was as easy as plowing money into the stock market and riding the wave. 

Think again, Mojumbo. 

One of the things that has always fascnated me about mutual funds is the idea of survivorship bias. 

Survivorship bias is basically… a phenomenon where historical returns of mutual funds are shown to investors, minus all the funds that failed. 

So… when you look at a history of investment returns from the major mutual fund companies, they’re only showing you the ones that, historically, worked out. They aren’t showing you any of the losers that failed miserably. 

It’s sort of like Instagram, where all you see are highly curated, perfect little lives.

And, if that was the totality of your understanding of the world, you would not be blamed for believing that every single human being living on Earth is flawless and happy, 100% of the time they are awake.

Anyway, back in reality, if you want a truly “battle-tested” savings and insurance plan which has literally survived a civil war, both world wars, and multiple pandemics, then go join my email list now and I’ll explain all the gory details of exactly how it works, including the not so nice bits. Then, you can decide for yourself whether or not it makes sense for you.

David Lewis

This post brought to you by //The Rogue Agent//. David has been a life insurance agent, and worked with some of the oldest and most respected mutual life insurance companies in the U.S., since 2004. Learn more about him and his business, here.