Is staying curious the most important thing you can do?

I belong to a couple of different National Park groups on Facebook. There are some great pictures and we've gotten a lot of useful info for our trips. Often, people will post questions about trips they're planning. On one such post, the person said her husband wanted to go to a park they'd never been to while she wanted to go back to the same couple of parks they been to before (more than once as I read her post).

Choosing the familiar over the unfamiliar is a common human behavior (there's an investing implication coming) but the post was sad in a way. It is important to learn new things, see new places and have different experiences. Aside from making life more interesting I have to believe there is psychic value to doing new things, even things that make us uncomfortable--not picking up a poisonous snake uncomfortable, more like having to figure out a new place uncomfortable. I lump this in with the idea of staying curious which is not always easy for people to do. I am learning that someone close to me does not have an ounce of curiosity in them and it has created awkwardness.

Sticking with the same subject, my wife and I go up to the Grand Canyon every year, the North Rim is six hours away and we just go for a couple of days. We mix the familiarity of that with going to new places, last fall we went to some new (to us) parks in Colorado and also took a big trip to Australia last April. We obviously mix the familiar with the unfamiliar but always taking the same trip and nothing but the same trip is a cycle that I would encourage people to break.

A totally unrelated example of this relates to changing your diet. About three years ago I reduced my sugar intake dramatically and then about two and half years ago I began intermittent fasting (I just skip breakfast). In doing tons of studying on these things I have concluded that everything we were told that was bad about fatty diets actually pertains to sugary diets (understanding that carb=sugar) and that cutting sugar prevents/solves a lot of health problems. I've also concluded that the concerns about cholesterol are flat out wrong, cholesterol (high cholesterol) is not the enemy. Do the research, draw your own conclusion. The point is as a function of curiosity, I learned something new and had the flexibility to do things differently with big results; A1C way down, lost 30lbs I didn't know I needed to lose while maintaining the amount of weight I workout with which I take to mean I lost no muscle mass. It is common for people to lose muscle mass when they try to lose weight which is a bad outcome. The last couple of years I did the pack test in a faster time than I'd done the previous few years (pack test is the physical requirement to fight wildfires where you hike for three miles wearing a 45 pound pack in 45 minutes or less).

Yesterday I had a day-job related lunch with a couple of fund managers and we talked about the potential challenges going forward for the traditional 60/40 portfolio due to investment grade yield being so low, below the rate of inflation in many instances. I've mentioned many times before that most clients own the Merger Fund (MERFX) for its tendency to have bond like volatility which helps offset equity volatility in the portfolio. There are years where it is a bond proxy and other years where it isn't. It may not be that reliable as a bond proxy but having owned it for many years now, I am convinced the low volatility is reliable.

If the prospect of fixed income yields below the rate of inflation is concerning then you need to be curious enough about alternatives to learn about them to assess whether they can help address this issue in your portfolio or in client portfolios if you're an advisor. If you've been reading this blog for any length of time you already know I believe in alternatives. Of course I maintain plenty of fixed income exposure, more in fixed income than alternatives, and the yields vary thanks to fixed income diversification but I think of part of that diversification as alternatives. If an alternative can return 4-6% with very little volatility, how different is that than owning a bond with a "normal" yield? MERFX has done this a few times but of course there have been years where it hasn't. Again, you'd need to draw your own conclusion, like going to new parks and changing my diet, I was curious, I learned and I implemented.

A similar dynamic exists with Bitcoin and asymmetric risk. I would encourage curiosity, taking the time to learn and then drawing your own conclusion. My conclusion is that the asymmetric risk is intriguing enough to own a sliver of it personally but because nothing underlies it and that it could be supplanted by something else, I don't own it for clients--zero is a very reasonable outcome.

Investing is just one facet where curiosity and learning are crucial...stay curious my friends.