No Soup For You!

Michael's daughter has officially mastered "No Soup For You!" and has inspired this week's newsletter.

The Market Is Basically the Soup Nazi

If you’ve ever seen Seinfeld, you know the Soup Nazi’s rules are simple: follow the process, don’t get cute, and don’t test your luck. The result? You walk away with legendary soup. But if you improvise—ask for bread, fumble your order, crack a joke?

“No soup for you!”

Turns out, the market isn’t all that different.

Stock Picking? Most of It’s Just Broth

Professor Hendrik Bessembinder’s study of 26,000 stocks uncovered a sobering truth: most individual stocks are wealth destroyers. The average one loses money—even when you include dividends—and the most common lifetime return? A full-blown 100% loss.

Only about 10% of stocks were responsible for nearly all the market’s long-term gains. So unless you happen to pick one of those rare few, you’re likely getting a lukewarm bowl of disappointment.

The takeaway? Don’t try to rewrite the menu. Broad diversification gives you a chance to own the winners without gambling on the losers exclusively.

Stay Within Your Heat Level

One of the biggest ways investors earn themselves a “no soup for you” moment? Straying from their risk tolerance.

If you’re someone who loses sleep when the market dips, don’t load up on high-volatility investments and hope for the best. That’s like ordering the five-alarm chili when you can barely handle pepper. And when you’re lucky enough to have gains...Take some profits. Don’t wait for a perfect exit—because the market doesn’t ring a bell before it turns.

Smart investing is about managing behavior just as much as managing money.

Soup Is Served—If You Follow the Rules

The market rewards patience, discipline, and humility. Stray too far outside the lines, and you might find yourself watching other investors enjoy the metaphorical soup while you’re stuck with regret.

“Take care of the cents and the dollars will take care of themselves.”
— Benjamin Franklin

Source: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2900447