(Belated) Father's Day Post - Investment Advice

I found myself sitting in my father-in-law's extraordinarily comfortable, tweed recliner, receiving another lesson in finance over a plastic cup of red wine. As I embraced the warm daze brought on by cheap spirits and fine La-Z-Boy construction, Steve, my father-in-law, explained the advantages of using exponential moving averages in an investment strategy:

(Conversation paraphrased)

"When the 50-day moving average dips below the 200-day moving average, you have a down-ward trend. This is your cue to 'pull the trigger'. When the 50-day crosses again, heading North, that's your cue to buy. Now look at this." Gesturing to his laptop, two lines materialized on a graph. One line was bumpy, heading in a generally upward direction, the other line, though also maintaining a general upward trend, looked like the results of a very nervous man's lie detector test. "An investor who follows this strategy generally performs as well as an investor who lets it ride, but his investments maintain a great deal of stability by eliminating the big swings in your portfolio. Now, the strategy has its problems. You can get burned on sharp upswings and downswings, if you don't act fast enough. Or, you can get burned on rapid repeated shifts in the market. Finally, when you cash out your investments, you can get burned on taxes. So, this isn't a replacement for your 401 K or even your Roth. But, if you have those fully funded and are looking for more to invest, this is a nice, stable strategy."

I was unimpressed. "It's a good strategy for people nearing retirement and perhaps for those without the stomach for the market, but for those of us with a few decades to go and the ability to endure the down-swings, the 'let it ride' strategy is better if only for its simplicity."

That's when Steve called upon that intrepid wisdom that only experienced dad's can muster: "You don't know what you don't know. You can't predict when you'll need the money. With the baby coming, security needs to be your priority."

He was right. I was looking at investing as a way to generate wealth-not security-and this was a problem. Up to this point, Sarah and I had been planning for Dominic for months, and in some ways, we'd been planning for him for years. But we'd only focused on the changes we needed to make in our lives, especially those things we needed to stop doing. I was putting aside video games (for the most part), spending a little less time with friends, and putting in more hours at work. She was watching what medications she took, abstaining from alcohol and sushi, laying on her left side and avoiding roller-coasters. We then realized that we needed to very purposefully re-imagine our lives: To not just to plan how Dominic will affect us but to establish a plan for Dominic. This sounds pretty obvious, but it's the sort of thing you just don't think about in the moment. Investments aside, we needed to rebalance our life-portfolio. (Corny, I know).