Many investors (me included) bring personality traits to their portfolios and investment strategies. This can be a positive or a negative. As a matter of personal philosophy I do not worry about things beyond my control. Read the word worry as emotional concern.
I am concerned that the market might be headed lower on this go around and that I might need to do more selling pursuant to my exit strategy. With these issues is the underlying understanding that markets go up and they go down, this does not change over time.
I understand that people get emotional but I write this type of post every so often to point out that ups and downs will always be the case. Being overly shaken up over something (that cannot literally kill me) that I know will happen over and over again is not something I want to do.
Think about the last ten years of wild swings, crashes, crises and bubbles. On June 6 1996 the S&P 500 closed at 673.03, it is up 87%. That is a little less than the historical norm but it is better than a threefold increase over the inflation rate (as measured by the postage stamp) in the same time period. For diligent savers, with no exit strategy during the bubble, it has been a fine last ten years.
Obviously there are going to be more moving parts for just about each individual but how much more do you know now than you did ten years ago?
To repeat from past posts, just stick to your investment strategy and leave emotion out of it.
Wikinvest Wire
4 comments:
Roger, what is your educational and professional background?
BA Economics San Diego State University 1989.
My first job in the business was at Schwab in SF in 1984. Got my series 7 in 1989 at Lehman Brothers. I was an institutional trader for most of the 90's until 2001 (laid off Sept 2001). Bounced around a tad until I started managing separate accounts in 2003.
On the other hand, you can't wait until your 65th birthday and say - (unemotionally of course) - gee, it looks like my strategy was wrong all these years.
My method FWIW, is to benchmark my portfolio against 50% AGG and 50% SPY. I'll let it pass if I'm under for a month or so, but if its under for a quarter, something is likely to change.
Younger investors should be less conservative than I am.
My benchmark is the Wilshire 5000. If I can't beat the market portfolio, then I need to hang up my hat.
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