The Investor’s Mindset: Extreme Ownership

The Investor’s Mindset is here!

Hey there,

Welcome to the first official edition of our newsletter, “The Investor’s Mindset.” We’re kicking off our newsletter series with the topic of ownership, and how it ties into investing.

We won’t spoil the good parts below, but we’ll give you a hint: investing is ownership. We’re big believers in the ownership mindset, which means taking full control of your future and freedom.
With introductions out of the way, let’s get to it.

When a team takes ownership of its problems, the problem gets solved. It's true in the battlefield, it's true in business, and it's true in life. Quote by Jocko Willink.

The ownership mindset

You are responsible for your money (but you already knew that).

After reading Extreme Ownership by Jocko Willink and Leif Babin, this thought is freshly stuck in our minds.

If you haven’t read it, the book talks about the leadership lessons that Willink and Babin learned in war as U.S. Navy Seals. Their main point is that the best leaders take true ownership over themselves and their teams. No excuses.

Our main point is that many investors do the same.

While leadership and investing may seem like two entirely separate topics, here’s where it clicked for us: replace the word “leader” with “investor.”

Now think of your “team” as your sources for research, your strategy, and the tools you use to manage your money:

The best investors take true ownership over themselves and their investing strategy and tools.

Here are some of our takeaways from the book’s framework:

1. Ownership over our finances can affect our emotional response.

In leadership, ownership may be over a team of people and everything they do. In investing, the ownership is over the goals, strategy, emotions, and tactics.

Let’s go through an example. Let’s say someone invests according to a riskier strategy. They end up losing money in a volatile market. How do they react?

An investor without an ownership mindset may blame the market. They may become emotional, and they may act on these emotions to compensate.

On the other hand, an investor with an ownership mindset will accept that their choices did not align with their risk tolerance or their goals. They will accept that they may need to adjust their strategy in order to feel more comfortable. That’s different than an in-the-moment quick fix.

It’s thinking long-term, which just so happens to be our favorite way to think.

2. It’s as important to believe in goals as it is to set them in the first place.

It’s true that it’s impossible to be certain about returns. If predicting the market was possible, we’d all be Warren Buffet.

Think about it this way: if a leader doesn’t believe in the mission, their team won’t be able to either. Suddenly, their choices aren’t as likely to propel them towards success. It’s the same with investing.

If an investor doesn’t believe that a goal will align with their future, they are less likely to make the strategic decisions to help themselves get there.

Not fully believing in goals may look like avoidance or testing too many tools “just in case.” Or, it may look like second guessing every investing decision.

Then, there’s believing in goals. That may look like adjusting a strategy based on regular financial self-check ins or staying the course even when the market gets a little wobbly.

3. Ego can be a big threat.

At this point, we know we’re in charge, we’re believing in our financial goals, and we’re well on our way to build our futures. But because investors are human, there’s a chance that ego could come into play.

In the same way that no great leader knows it all, no investor does either (no matter how smart).

As investors, sometimes we’re right and sometimes we’re wrong. The important thing to remember is to stay open to new information, even if it contradicts what we thought we knew as investors..

4. Simplicity is key.

There are only a set number of hours in a day. Some investing strategies require more time than others to plan and execute.

There are also thousands of resources that talk about investing. It’s easy to get caught in a rabbit hole of information.

And, there are dozens of brokerage and retirement account options. But accounts need to be monitored.

We could keep going, but you get the point. There are a lot of options and a lot of information, but less is more.

The more complicated our financial lives get, the harder it is to keep up.

5. Prioritization is important too.

If everything is top priority, then nothing is.

It happens in leadership and it happens in investing: we try to work on everything at once.

When it comes to investing, good prioritization helps us focus on the goals that matter most.

This may look like contributing to a retirement account before a taxable account. It may look like allocating more money towards a specific stock or ETF that’s on strategy. Or, it may mean adjusting a contribution schedule to make room for other financial obligations.

The good thing is our priorities are up to us as individuals to choose.

And that’s the ownership mindset.

While external factors do come into play, our mindset can guide our reactions, progress, and chances of reaching our goals. It’s simply a mental shift.

We put it into practice

Why investors need to K.I.S.S more

When it comes to investing, talk about information overload. On one hand, we can make informed decisions and create smart strategies. On the other hand, information overload can be harmful to investing. So, we broke down some strategies that may help you keep things simple.

The 3 Ps of investing: purpose, plan, and patience

We’ve been thinking: why do we want to grow our wealth? What do we (as individual investors) really want? With endless investing options and resources, we thought about it like a diet. There are dozens of choices, but they won’t all work for the same goal. It’s the same with investing strategies.

How to stop self-sabotage: taking control over your wealth and health

If you liked the ownership mindset, you’ll like this post. We dive deeper into identifying when we need to shift our mindset. We talk about how to actually shift it too.

Our MVPs of the internet

We scoured the internet for more. Here’s what we found most interesting:

Learn about extreme ownership from Jocko Willink himself in this Tedx talk.

Becoming a better leader falls into the self-improvement category. James Clear pulled out some quotes that felt relevant to our theme of extreme ownership this month. Read them here.

We thought this article by Ben Carlson (A Wealth of Common Sense) touched on lesson 4 pretty well. He writes about ego and how to balance confidence with humility, using movie examples.

Just for fun

We promised you something fun, and we keep our promises. Can you solve this riddle?

You can pick one of three hidden pies. One pie is in the green, but the other two are in the red. Your goal is to pick the green pie. You then pick a pie.

Before your choice is revealed, one of the pies you didn’t choose is revealed to be red.

You are then given the option to change your choice.

Should you switch? Why or why not?

Check next month’s newsletter for the answer!

Join 500,000+ readers

Want to get future editions of The Investor’s Mindset in your inbox? We’re only sending it to current clients right now, but we’d love to have you join us.

Check the background of M1 Finance LLC on FINRA's BrokerCheck

By using this website, you accept our Terms of Use and Privacy Policy and acknowledge receipt of all disclosures in our Disclosure Library. All agreements are available in our Agreement Library. M1 relies on information from various sources believed to be reliable, including clients and third parties, but cannot guarantee the accuracy and completeness of that information.

M1 refers to M1 Holdings Inc., and its affiliates. M1 Holdings is a technology company offering a range of financial products and services through its wholly-owned, separate but affiliated operating subsidiaries, M1 Finance LLC and M1 Spend LLC.

M1 Plus is an annual membership that confers benefits for products and services offered by M1 Finance LLC and M1 Spend LLC.

All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future performance. Using M1 Borrow’s margin account can add to these risks, and you should learn more before borrowing. Nothing in this informational site is an offer, solicitation of an offer, or advice to buy or sell any security and you are encouraged to consult your personal investment, legal, or tax advisors.

Brokerage products and services are not FDIC insured, no bank guarantee, and may lose value. Brokerage products and services are offered by M1 Finance LLC, an SEC registered broker-dealer, Member FINRA / SIPC.

M1 Spend checking accounts furnished by Lincoln Savings Bank, Member FDIC. M1 Visa® Debit Card is issued by Lincoln Savings Bank, Member FDIC.

Credit Card not available for US Territory Residents. Review Cardholder Agreement and Rewards Terms for important information about the Owner’s Rewards Card by M1. The Owner’s Rewards Card by M1 is Powered by Deserve and issued by Celtic Bank, a Utah-Chartered Industrial Bank, Member FDIC.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.

200 N LaSalle St., Ste. 800 Chicago, IL 60601

© Copyright 2021 M1 Holdings Inc.