Mr. “Yeah But”

Sometimes I wonder why people ask me for investment advice when they are completely incapable of hearing it, let alone implementing it. That’s what I thought when I met with Mr. “Yeah But”. You know this guy---the one who responds to every comment with the exasperating phrase, “yeah but…” and then goes on to refute anything you have said.

After encountering hundreds of these types (I called him Mr., but plenty of female incarnations exist!), you would think that I would not take his bait, but there I was, pleading with him to listen to why there were problems with his investment philosophy. I should know that there are plenty of do-it-yourselfers who fall in love with their abilities when the market rises and then never fully account for losses when the market turns against them. But there I was, engaging with a guy who was clearly only interested in validating his position.

During my thirty minutes with Mr. Yeah But, he told me that: “value investing is dead”; “I want to make more than the stock market”; and “my funds have done better than the index over the past five years”; and “I’m doing great this year.” These pearls of wisdom were in response to the advice that I provided about his portfolio, which in various ways boiled down to the fact that I thought he was assuming too much risk for a retired guy who needed to draw money from his investment accounts.

I eventually sent Mr. Yeah But on his way, because one can only take this type for so long. After he left, I started to dig around for information about his specific mutual fund holdings. (I know that this sounds completely compulsive, but I did get to write an article about it, right?) While the stock mutual funds were pretty good in general, only one of the five had beaten the return of the S&P 500 index over the past five years. And although Mr. Yeah But claimed that all of his funds were outperforming the index year-to-date, only one was, which meant that there is absolutely no way that his total portfolio was going to beat the index this year.

So here we go again, another investor who tells himself a story about his investing prowess and to what avail? This is like the guy who bragged about his technology holdings in 1999, the one who said that the investment environment was “different”, only to have a devastating bear market eat up 80% of his portfolio value from 2000-2002. Mr. Yeah But’s response to that point would be, “Yeah, but look at how well my technology holdings are doing this year!” To which a smart-aleck might respond, “Yeah, but the Nasdaq is only at 2750 today, not even close to 5,000, where it was at the top.”

Someone needs to explain to me why a guy like that wants to spend the time to talk to a professional if he already knows all of the answers. As I have said in this column and on the air, the best investors that I know are consistently testing their ideas and beliefs. I have a feeling that people like Mr. Yeah But will find the holes in their philosophies in a far more painful way than in a thirty minute meeting with an investment advisor.