Please note that our office will be closed Monday, January 16th in honor of Martin Luther King Jr. Day.
Investing Resolutions for 2012
Jeepers, the media is starting to take note of the positives in 2011.
Make no mistake, 2012 will be riddled with election and other volatility. But recently inserted into the “if it bleeds, it leads” media status quo are facts I’ve been reporting over the last year. Summarizing: business is up and un-employment is down. Four years after the apocalypse, trickles of hope are showing momentum that is becoming harder to ignore.
I could banter about ties between psychological financial behavior and macro-economics that elongate periods of distress, but this would likely bore all but me…and maybe even me a little. The short story is things are getting better faster, as they typically do 3-5 years after mega-collapse.
Notably, the aftermath shows stocks did not go to zero, the U.S. did not become a fascist state, and the world did not end. Crisis outcome, moreover, dictates the more time that goes by without the worst case scenario emerging, the less likely the worst case scenario is.
Of course, account values have not yet illustrated a blooming garden since 2007. But the way this year has been set up, my expectation is more flowers will come in 2012. In that vein, I propose 10 resolutions for this year:
Investing Resolutions for 2012* 1. I'll remember what is obvious now wasn’t obvious before it happened.
2. I won't make investment decisions based on what seems likely or unlikely.
3. I won't take more risk than I have the willingness and need to take.
4. I will avoid complex investments and eschew those promising big returns with little risk.
5. Forecasts are guesses about the future – the unknowable. Given the number of possible outcomes, few guesses will hit the mark. They have no measurable value and I will ignore them.
6. I won't confuse strategy with outcome. Disappointing returns doesn't mean my strategy was wrong. Nothing in life always works the way I want.
7. There are rough times in any investment plan, and changing course during uncertainty is more likely to make things worse than better. So I will adhere to my investment plan.
8. When tempted to react to trends, predictions or the results of others, I'll refer to the previous resolution.
9. Over time, higher risk and return come from stocks and lower risk and return from bonds. I will use both to take on risk appropriate for me, making sure any bonds I hold are of the highest quality.
10. I won't confuse current yield with long term returns. Periods exist when safe, low yield investments outperform a diversified stock portfolio. But there are no long term periods when this has been the case.
We wish you health, wealth and happiness in 2012. Please let us know what we can do to help you on your journey to investment success.
I welcome your questions and comments.
becker@wiserfinancial.com Marc Becker, AIF
Managing Partner, Wiser Financial Coaching
Columnist, The Advisor Sherpa
*While substantially altered, these resolutions were borrowed from Larry Swedroe. Thanks Larry!
http://www.cbsnews.com/8301-505123_162-57346641/top-10-new-years-investing-resolutions/?tag=cbsnewsMainColumnArea
Golf Tip of the Week Pretend Your Puttershaft Is Glass I putt my best when I have a sense of gentleness in my hands, my stroke, and the way the ball comes off the putterface. Then the ball rolls consistently, which might just be the secret to fine putting.
To promote those feelings, I visualize the puttershaft as being extremely limber, almost as flexible as a length of rope, which means the only way I can get the clubhead to swing truly is to stroke very softly, smoothly, and slowly.
If the limber shaft image doesn't seem to be working, I'll replace it in my mind's eye with a delicate glass shaft that will shatter if I'm even a tiny bit harsh at the ball.
Vital to swinging the putter this gently, but with sufficient speed to roll the ball the required distance, is a very light grip. Equally important is retaining that softness in the fingers throughout the stroke--in other words, no involuntary grabbing once you've set the club in motion.
Source: http://www.nicklaus.com/nicklaus_golftips/
Trivia Time This week's question: January is named after what Roman god?
Do you know? E-mail your answer wendy@wiserfinancial.com and if you are correct, receive a free "Way to Go!", "You Rock!", or other congratulatory phrase. Then brag to all your friends about how smart you are.
The answers will be in next week's newsletter!
Last week's question: Why is the day after Thanksgiving called Black Friday?
Answer: The day after Thanksgiving is traditionally the day when large companies become profitable for the year. In other words, their books go from red (a loss) to black (profitable), hence why the day got nicknamed "Black Friday."
Congratulations to David R. for getting the correct answer! Big applause!
Last week's search engine challenge: What kind of toys are are these?
Answer: The items in the picture were mechanical banks, popular in the late 1800s and early 1900s.
Congrats to David R. for getting the correct answer!
