Superbowl Sunday is this Sunday and everyone is placing their bets. 

There is something called the Westgate SuperContest every year. It is held by a sports book in Las Vegas. For an entry fee of $1500, you can compete against everyone else who is willing to put their money down.  To win more than $1,000,000, during the football season, you pick five games a week against the point spread. That is, if the Cowboys are playing the Redskins, and the Cowboys are favored to win by 5 points, then you need to pick either the Cowboys to win by more than five points or the Redskins to lose by less than five points. You can pick any team playing that week, and you only need to pick five games.  

How are the odds?  They have held this contest for more than thirty years, and no one has ever picked better than 65% in a given year. And no one has ever done it twice! Yes, you read that right.  You might get it right one year, but no one in the history of the contest has ever gotten it right twice. And in spite of these very poor odds, hundreds of thousands of people participate every year.  

Is investing similar to gambling…or not?  

You might say, “investing isn’t like gambling.” You know what companies earn, who is running them, why people may or may not need their products, who is regulating them. And a trade war might disrupt some area of the market, just like losing a starting quarterback might change how you bet on a game.  

On the flip side, “investing is like gambling” because you can lose a lot of money, if not your entire investment. 

I would propose that investing is a bit of both.  

This is why you need to understand if your advisor has the skills required to manage your money.  And you need to trust your advisor – we recommend working with a fee-only advisor, a financial fiduciary, who is legally bound to put your interests before their own.  

My work as a money manager… 

Let’s assume that fifteen minutes of vigorous exercise daily adds three years to life. Being a money manager is that fifteen minutes. Investing, in the end, is a discipline. It’s not fun, or sexy; it can be boring… very boring. It takes similar discipline that exercising takes. To take the stairs instead of the elevator. It’s eating your veggies and forgoing a cheesecake.  

When we invest, we are looking for two things: First, to seek to make the most of our fifteen minutes of exercise. That is, to take advantage of market growth. And second, to aim to mitigate the risks of the inevitable hurricane that will soak you to the bone and give you a fever (the bear market).  

Investing is not easy. If it were easy, then money managers would consistently outperform the stock market.  As it stands, 98% of fund managers don’t beat an index such as the S&P 500.*    

I can say with certainty that our prognostications about stock market performance in 2020 will be no better than those participating in the Westgate SuperContest.  

So, our forecast for 2020 is as follows:  

  • US equity markets will likely end the year higher than they started.  
  • We likely won’t enter a bear market.  

But I can say the same thing about most years.  

What’s your work?  

Our work is only part of the equation. You also need to understand your own behavior when it comes to losing money…because while the stock market had an incredible year last year, one day, the stock market will turn south, and we will experience another bear market. (The prevailing definition of a bear market is a decline of 20% or more – so if you start with $100,000, you would lose $20,000 or more; if you start with $1,000,000, you would lose $200,000.) 

More about our work 

So, this is our work. We aren’t going to consistently outperform the market, nor will our predictions about the market be accurate a large portion of the time.  Rather, our work is striving to help clients manage risk that comes with a bear market.   

In conclusion 

How are your investment accounts positioned? Do they have enough risk management strategies in place? Do you even know what’s meant by risk management strategies? 

We can’t predict with any certainty what will happen in the markets today, tomorrow, this week or this year.  But we can help investors seek to align their investments with their personal risk tolerance.  And we don’t outsource the money management, and seek to have the underlying investments in our portfolios in alignment with the temperature of the market, as much as is feasible.  

We offer a risk assessment of your accounts free of charge.  We want our community to be informed.  

If we can help, please reach out.   


Other Contributors – Robert Gambill 


* Quora, Joe Cantu, 10/30/2017 

Alexis Advisors is a registered investment advisor with the Commonwealth of Virginia.