Cullen Roche: Investors Should Focus On The Portfolio They Need, Not The Portfolio They Want

During his recent interview on The Business Brew Podcast, Cullen Roche explained why investors should focus on the portfolio they need, and not on the portfolio they want. Here’s an excerpt from the interview:

Roche: As I’ve gotten older I’ve become much more of like a behavioralist. I am increasingly hyper focused on just investor behavior, and I’m fully convinced at this point in my life that the deficient portfolio that you can stick with will probably perform better than chasing the optimal portfolio because you’ll constantly make mistakes around chasing the optimal portfolio.

Whereas when you kind of work at things from more of like a needs versus wants perspective, when you invest in the portfolio that you need relative to the portfolio that you want you just sort of realize that you’re making some sacrifices in the portfolio that you need.

And those sacrifices actually in the long run they end up smoothing returns in a way that they result in a lot less behavioral bias.

You know 2021 everyone’s looking at Cathy Wood’s portfolio and you know that’s the portfolio everybody wants. But by the time you typically buy into the portfolio that you want well that portfolio sometimes ends up being the disaster portfolio like it has been in 2022, and then all of a sudden you know you realize that God if I had just… if I sort of you know been a little less greedy and gone for the portfolio that I need well you’d still be down this year but you wouldn’t be down 70% this year.

You can watch the entire discussion here: