There's No Need for Regret—You Always Could Have Done Better

There’s No Need for Regret—You Always Could Have Done Better

The 1994 movie Forrest Gump featured one of the best fictional investing decisions in all of film. Late in the movie, Gump receives a letter from his war buddy and business partner Lieutenant Dan, which informs him how Dan has invested the profits from their shrimp business.1

“He’s got me invested in some kind of fruit company,” says Gump, holding up a letter with the old Apple Computer logo.

It’s been estimated that, in real life, the pair’s $100,000 investment in the mid-1970s would have given them a 3% stake in the company. Today their share would be worth more than $90 billion.

Never mind that the movie is a social satire predicated on a series of incredibly lucky outcomes for the decent but simple Gump; that the screenwriters had the advantage of 20/20 hindsight; and that Lieutenant Dan’s winning gamble was the equivalent of hitting a hole-in-one golf shot while blindfolded. Some people today believe they can identify and buy “the next Apple” before it gets big.

In reality, successful long-term investing will yield very few home runs. And because a diverse strategy aims to choose asset categories that can move in dissimilar directions, it gives investors a lot of chances to feel a little regret.

John “Jack” Bogle, the founder of Vanguard and a pioneer in low-cost, mutual fund investing, often felt like he was missing out somehow. He was known for splitting his personal investments evenly between stocks and bonds in a 50/50 portfolio. This financially brilliant man said, “I spend half my time wondering why I have so much in stocks, and about half wondering why so little.”2

Advisor Ben Carlson observes that some investors regret missing out on big gains while others experience more regret when they participate in big losses. He says, “A balanced portfolio is a simple way to minimize regret by spreading it around, but it never goes away completely.”

It’s worth noting that when retirees talk about their regrets as they look back on building their nest egg, they most often feel remorse over their own actions, not failing to guess big wins. For example, they often feel like they could have started investing earlier or saving more aggressively.

The prudent investor knows that the things they will most regret are the self-defeating actions taken because of ignorance or in reaction to their emotions. They know that a trusted advisor can guide them with a plan designed for their specific circumstances and needs. And that he or she can help them continue toward success even when they feel their goal is impossibly far off.

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