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.
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.’
