Once there were two brothers.
A six-year gap between the two, and a younger brother who absolutely adored and admired his elder sibling.
Their lives would take two very different paths, yet they were raised in the same household, alongside the same family, in the same small town.
The elder would be amongst a first generation diagnosed with attention-deficit/hyperactivity disorder and would struggle behaviorally throughout his schooling years. Consistently spending time in detention would begin to mold a community of friends that would amplify his troubles.
The younger brother wasn’t exempt from his own playground woes, finding himself expelled from the 7th grade. Yet, the younger brother had the benefit of youth, having a front-row seat to the consequences that were ahead for his elder sibling.
As a teenager, the elder brother would become well acquainted with juvenile hall. This trend is not easily broken, leading to multiple prison sentences. Over the next few decades, he would spend more time incarcerated than not.
As mentioned, watching as a spectator, the younger brother was scared to follow in the footsteps of the brother he had looked up to his whole life.
As you might’ve guessed, I’m the younger brother in this autobiographical tale.
I’ve always been very curious about how or why our paths had diverged so significantly, and I often think back to a piece of advice I gave him many years ago. He found himself in a season of trouble and came to me looking for encouragement. My advice and observations were simple. I encouraged him to aspire to string together some good decisions; a handful of consecutive good decisions, enough for him to recognize the fruit and freedom that these compounding decisions would bear.
My brother is very intelligent. A family tradition at the Cummings household is to play Trivial Pursuit, and he probably holds the most personal wins in the family. His problem is and has always been that he could never get in the rhythm of consistent and consecutive good decisions. He’d get in a bit of a positive groove, but then a hiccup of a decision would send him spiraling backward.
It’s often attributed to Albert Einstein for stating that,
“Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.”
This quote speaks to the miraculous benefits compounding has for the saver that invests and the woes it causes for the debt-ridden borrower. Decisions compound too, both good decisions and bad ones.
For my brother, I can’t pinpoint a singular event or decision that changed the trajectory of his life, but I can see the compounding effects of his decisions. I think it’s important to state here that (1) I love my brother dearly, and (2) I’m not intending to make light of the obstacles he’s faced nor cast any sort of judgment on him. My brother and I discuss this topic of decision-making often, and he’d be the first to provide a life sermon on the real consequences of one’s bad decisions.
Personal finances are not immune to the life lesson we glean here. Successful investors build up consistent and consecutive good decisions that yield compounding benefits over time.
In David’s 2023 white paper, he lays out an eloquent recap of 2022 and a look ahead for what he sees on the horizon for 2023. The subject matter is deep and rich, full of meaty finance topics and analysis. In his concluding paragraph, there is one sentence that really stood out to me:
“Investor behavior is the primary determinant of results.”
Said another way, one could carry the highest IQ, have the deepest finance vocabulary, and be blessed with the foresight of a fortune teller, yet still fail or stumble as an investor. Why? Because, at the end of the day, investor behavior trumps all. The day-to-day actual decisions we make matter most.
Thinking back to my conversation with my brother, investors deserve the same advice. Your ability to string together a handful of good financial decisions will compound and pay dividends for a lifetime. I’m specifically paid to give advice, yet clients don’t always take my advice. I’m compensated to counsel others, yet sometimes my counsel is ignored. The financial enemies – excess leverage, hubris, shiny objects, envy, capitulation, fear, etc. – can often be the obstacles that obstruct us from making good decisions.
Each and every one of us needs A.A. (Awareness and Accountability). The path to successful investing relies on (1) educating ourselves to become aware of what good investor behavior looks like and (2) resourcing the right advice-giver to help hold us accountable for making good decisions.
Much like my brother and I, investors will have divergent paths based on their behavior and the sum of their decisions.
