2022, and winning the loser's game

For almost everybody who didn't own an oil well, the investment process in 2022 got less fun. In reality the market started its sobering process in many asset classes in 2021, and it may well continue for some time.

This is ok, and to be expected. Having lived and invested through several of these cycles, one thing that is going to happen in 2023 is a refocusing process. Capital costs more now, and as a business manager if you cannot show how your return is going to exceed the risk-free rate, you are going to get less capital. As any gardener knows, pruning is critical to future growth, and 2023 is going to be a pruning year.

As investors limp away from 2022, for some time (though not forever), they'll remember that it wasn't fun. Actually, it's just a perception that it's ever fun. Charles Ellis in 1975 called investing in the market "The Loser's Game." Almost everyone loses relative to the indexes, even in years with high returns, though only a percentage of those people realize it. As an example, just one large behavioral error over a *lifetime* and you'll likely lose. Though one is better than many!

So why play a game that almost everyone loses?

Two reasons. First, you don't really have a choice. Social Security is not going to cover your retirement in full, and as people learned in 2022, inflation is the enemy. If you don't construct some type of program that puts you on the receiving end of inflationary increases, you're in trouble.

Second, the upside to winning the loser's game is enormous, particularly if you do so over a medium to long period of time. And unlike Las Vegas, there is a high probability of winning if you do things a certain way. An approach based on a pattern that leads to a highly desired outcome is attractive. That is something you want to be involved in.

In other words, as an investor you have to understand, in an unemotional way, why almost everyone is losing, and then be willing to play in your own, different sandbox.

For those of you who are clients, a sincere thank you for playing in our sandbox. We know it's not a game, and we don't take it lightly. There are now thousands of retirements, college tuitions, future vacations, fun weddings, and even kitchen remodelings riding on the outcomes.

The 17 employees and Advisors of One Day In July also thank you for helping us spread the word. Stay positive and have a happy last few days of 2022!

Dan Cunningham

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