Each week I talk with investors about their investments and how to reach their investment goals. The conversations nearly always focus around three things:
- Stock picking…What are the best stocks for
right now? What stocks should be sold right now? - Market timing…Is now a good time to invest in
equities? Or better yet is this the BEST
time to invest in equities? What asset classes/sectors/countries are good or
bad for investing right now? - Track record investing…This investment manager
had a superior return over the last month, year or five years. Should we
concentrate our investments with this manager?
Unfortunately, each one of
these is a sign that the investor is gambling and speculating with their
investment money. We are emotional beings and we are easily swayed by the Wall
Street bullies continual media blitz. This blitz is make sure that we continue
gambling and speculating with our investment dollars.
Right now, investors are
looking for someone who will market time for them. “If the market is going down
shouldn’t we get out of the market?” Is a popular question right now. This is
market timing and will result in disappointing results over the long term.
Below is a quote by Mark
Matson which I believe best describes the dilemma investors face every day.
“What an investor must
eventually come to, before they’re willing to accept the free market, is this
realization: I am spiritually, intellectually, and emotionally incapable of
managing my own behavior and my portfolio. This is a big pill for many people
to swallow. Most people realize that, if left to their own devices, they
eventually slip back into speculating and gambling with their portfolios.
Ironically, by admitting our own humanity and frailty, we can gain new-found
strength and accept a better investing solution.” – Mark Matson’s Main Street Money #MSMmonday
Many investors want to be in ‘control’ of their investments. Unfortunately, this ‘control’ means using the three signs of gambling and speculating described above. This can be very destructive to your portfolio as well as your confidence in the equity markets.
Sadly, most investors are looking for the ‘holy grail’ of
investing which does not exist. The Wall Street bullies continue to send the message
that they can predict the future. Despite the bullies very poor track record on
predicting the future, investors continue to seek their predictions.
Investors continue to seek stock market returns with
Treasury bill risk and what they receive is Treasury bill returns and stock
market risk.
Stop empowering the Wall Street bullies and find an
investor coach/fiduciary adviser. Your coach will help you build a prudent
portfolio based on your risk level. Once this portfolio is built your coach
will educate you and keep you disciplined to your plan.
As my friend Brad Nagel says ‘You manage your life and let
your adviser manage your portfolio.’
Your adviser should protect the future you from the current you.
