The recent down turn in the equity markets have many investors spooked. I have heard questions such as: Is this a good time to be in the stock market? Should I sell now to cut my losses? (Selling in a down turn only locks in your losses.) If I buy annuities won’t I be guaranteed a return?
These are questions based on an emotional response. Many investors seek to find safe haven in times of market turmoil. This what the financial industry wants you to do and has trained investors to do. The Wall Street bullies have a vested interest in keeping you trading.
Successful investing is not, per se, a portfolio problem, but rather a people problem. No matter how well designed and engineered a portfolio is, it can easily be destroyed by imprudent investor behavior.
Unfortunately, the true enemy of every investor lies within.
The instincts, emotions, and even biochemical makeup of human beings drives them to gamble and speculate with their money, even when they don’t mean to. This problem is multiplied exponentially by financial institutions that profit from this self-destructive cycle. You will see that this cycle is hard wired into every human being in the world. No one is exempt.
After studying the collective behavior of thousands of real world investors over the past decade, several truths have made themselves clear. It is my belief that many, if not most financial product sponsors are aware of this dilemma,
but either don’t care that the investor is harmed by it,
or are ignorant of the damage that they unknowingly perpetrate on the American investor.
Investors don’t need better products they need better advice. Advice which is in their best interest and not the best interest of the brokerage firm, bank or insurance company.
Because it is a behavior problem and not a portfolio problem. Investors need an investor coach/fiduciary adviser to guide them. If your adviser does whatever you tell them. You are overpaying them. If your adviser allows you to panic and sell during a down turn. Fire them and hire an investor coach/fiduciary adviser.
To succeed in investing you must own equities……globally diversify….rebalance.