Becoming a “Maxi” and Removing Distractions

If I’m a maxi for anything, it’s SPY and QQQ.

My favorite “dividend growth stocks”? SPY and QQQ, okay and maybe XLK.

My favorite ticker to dollar cost average? SPY and QQQ.

What is a “maxi” and why do people favor being a “maxi”?
“Maxi” is short for maximalist, defined as “one who advocates extremist views or radical action to secure a social or political goal”. The term was popularized in recent history by famous Bitcoin bull, Michael Saylor.

Being a maxi simplifies capital allocation, which can make a very difficult endeavor (investing) much easier. Investors should be supremely cautious which asset they choose to be a “maxi” for.

What are the benefits of becoming a maximalist?
The primary benefit is preserving mental capital.

A clear mind, with a clear purpose can help to reduce our erratic responses to the notorious fear and greed emotions, which will drive improved investment performance over time.

As Michael Saylor said (paraphrasing) “there is no second best, and once you understand there is no second best, you can spend every second of your life acquiring more Bitcoin”. People will often refer to this behavior as “stacking sats”, sat is short hand for satoshi- the smallest denomination of a bitcoin. Not everyone is wired to hold all their wealth in an asset that is characterized by extreme bouts of volatility.

So, I argue that most investors should apply the “maxi” ideology to market averages like SPY and QQQ. If we re-orient our goal to simply stacking SPY, more energy can be spent finding ways to accumulate resources with which to stack SPY (quick note to say that VOO is effectively the same exposure as SPY but with lower fees, I will continue to reference SPY in this article because it is a better ticker).

Refrain from Moving the Goalposts

If the goal is always changing as trends move around, things can get lost in the shuffle and the preoccupation with risk on/off can hinder our goal of aggregating and compounding our assets.

Becoming a SPY or QQQ “maxi” means absolving yourself of macro worries - no one knows what’s going to happen, and that’s okay because macro investing is notoriously difficult. For example, a recession has been forecast since the middle of 2021, but (other than the first two quarters of 2022) we have yet to see a proper recession. Perhaps it is just about to hit as I write this, or maybe not. But, as long as US Exceptionalism exists, “number go up” over the long term and therefore being a SPY/QQQ maxi is a great strategy in the long term.

Reorienting our focus from daily/weekly trading profits to accumulating broad equity exposure will likely result in excess income and excess assets over the long term, particularly because most traders quit (blow up, or both) before achieving consistent profitability.

I think my “Maxi Portfolio” would be something like SPY/QQQ/BTC 60/30/10, turn on dividend reinvesting and simply buy that portfolio every day/week/month. As we discussed in an earlier post, perhaps the most tangible way for retail investors to outperform the indices is to hold their benchmark and overweight the top name in a popular theme. This requires patience and discipline to keep from overconfidence leading to overtrading or excessive risk taking (overallocation to individual securities).

Investors must set the goal posts and entrench them. Whether we are aiming for relative performance vs a benchmark or absolute return (trading for cash flow), the goal post must remain top of mind in both draw downs and bull markets.