A long-time friend wrote to me recently, asking, in essence, the question in this article’s headline. On a high level, he knows SMI does something in the investment space. But as he’s become less satisfied with how his financial advisor has been handling his family’s investments, he’s become more interested in knowing just what exactly SMI is all about.
At first glance, it’s very simple. SMI publishes a newsletter for do-it-yourself investors. We offer rules-based mutual fund investment strategies along with specific fund recommendations.
From there, however, a degree of confusion and misunderstanding sometimes sets in.
Outside the conversation
When people think about their options for getting help with investing, most probably think of investment advisors, although a fair number probably assume they could not afford to go that route. Others are familiar with target-date mutual funds, and may think of them as a way to manage their portfolio with the proper mix of stocks and bonds without having to pay for an advisor. (See Target-Date Funds: The Devil’s in the Details.)
However, subscribing to an investment newsletter is probably not top-of-mind. Many have simply never heard of such a thing. Those that have, may not view this segment of the investing space all that favorably. After all, it’s been home to all manner of market-timers, perma-bears, perma-gold bugs, and others who tend to camp on one side of the fear/greed spectrum or the other.
It can be a tough neighborhood for a Christian publisher to live in!
Three guiding factors
It took more time and effort than I thought it would to explain to my friend what an investment newsletter is. Thankfully, I found it much easier to describe what distinguishes SMI from other sources of investment guidance. Here are the three factors that I highlighted.
Principles. The approach to investing SMI tries to encourage in our members is one marked by patience and faith. It takes the mindset of a patient long-term investor, as compared to a short-term trader, to ride out the market’s ups and downs. And it takes faith to hold everything — our portfolios, our lives — with open hands, trusting in God as our provider, not Wall Street.
In past times of market stress, we've heard from many members who said our emphasis on such principles made a big difference in helping them survive the storm.
Process. The investment process we use is objective, mechanical, and rules-based. We don’t gather around a conference room table to choose investments based on the price of oil, who won the latest election, or other ever-changing factors. Instead, we rely on the simple, powerful rules of momentum investing.
This isn’t a magic bullet that guarantees great returns every month or even every year. However, our process has generated very favorable long-term returns. And a rules-based system tends to be easier to trust and stay with than one based on the opinions of a money manager.
Purpose. We’re an overtly, unapologetically Christian organization. What excites us is encouraging people to invest as a means of honoring God, helping them responsibly provide for their families and joyfully support Christ’s work in the world.
A well-kept secret
When I was approached about the possibility of joining Sound Mind Investing, my family was living in Chicago and had never been to Louisville. In fact, it wasn’t even on our radar screen as a place to visit some day. But after we began exploring the city, and now, after living here for over four years, we often describe Louisville as a well-kept secret. The weather is nice, the people are friendly, and the cost of living is a lot lower than Chicago.
SMI is also something of a well-kept secret, which may have something to do with how it’s described.
So, how do you describe SMI to others? Do you use the phrase “investment newsletter”? And how do you distinguish our investing approach from other methods?