It was a Friday afternoon. I had just picked up my kids from school and was ready to kick off the weekend when I heard a scream from the back of the house:
“Papa! Moosey ate Jacob’s sock!”
Our Basset Hound, Moose, had done this once before as a puppy, so I knew exactly what needed to happen—and what it was going to cost. After a few four-letter words, I loaded the kids and the dog into the car and headed to the emergency vet, since our regular vet was already closed.
In case you’re curious, the process for a swallowed sock goes like this:
- The vet induces vomiting: $200
- Then they stop the vomiting: another $200
- Add tax and fees, and you’ve got a $419 sock, now covered in whatever else Moose had eaten in the last 24 hours.
You might be thinking, “Aren’t there cheaper options?”
Sure. We could’ve given Moose hydrogen peroxide at home to induce vomiting—cost: $2.19. Or we could’ve done nothing and hoped to find the sock in the backyard 24–48 hours later (if you know what I mean). But both of those options come with significant risks.
What if the hydrogen peroxide didn’t work? What if we gave him too much? What if it made him sick for days? I’m not a vet—I don’t know all the risks or long-term consequences. And hoping he passes it? That’s a gamble. If he didn’t, we’d be looking at surgery, which could cost 10 times more—and that’s not even considering the risk to Moose’s health.
So, What Does This Have to Do with Investing?
As a financial advisor, this whole ordeal got me thinking about risk management—and how we approach it in our portfolios.
When markets are strong, managing risk can feel unnecessary. Why not just buy the S&P 500? It’s low-cost, and recent history shows it outperforms many strategies. But things seem easy—until they’re not. What happens when your dog’s sock doesn’t end up in the yard?
From 2000 to 2010, the S&P 500 was essentially flat. Meanwhile, a diversified, professionally managed portfolio with risk mitigation strategies delivered an annualized return of around 6%. Sure, it underperformed in the booming '90s, and yes, it cost more—but during the downturns, it provided stability and growth.
The Real Lesson
We never know when our kids will throw a sock to the dog—or when the market will throw us a curveball. Risk management isn’t about avoiding all risk. It’s about understanding the trade-offs, preparing for the unexpected, and making informed decisions that preserve your long-term goals.
Sometimes, paying a little more today—whether it’s for a vet visit or a diversified portfolio—can save you from much bigger costs down the road.
Read more articles by Affinity Wealth Advisory Group