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| VIDEO OF THE WEEK: | |||||||||
| The lure of market timing is strong, appealing to our instinctive nature to move toward that which helps our survival and away from painful market conditions. The hook investors bite onto is wish fulfillment. They want to believe that there is someone that consistently predict and forecast the future to outsized returns without any additional risk. If someone could do it, life and investing would be so easy. Don’t fall for it. Returns come from the capital markets, and diversification is the best way to control risk. Don't try and time the market. Getting in an out is a losers game. Because of our emotions driven by the news headlines, this is easier said than done. | |||||||||
| Most investors are smart people. This leads to the deadly trap of overconfidence. Overconfidence leads to trying to predict the future. If you are an overconfident investor, you will be humbled by the markets and your inability to consistently predict what is going to happen. Then the overconfident investor tells himself or herself necessary lies to justify imprudent behavior. Watch this video to make sure you remain a humble prudent investor. | |||||||||
| Examining Expectations - Hindsight Bias (5:25) | |||||||||
| There are many in the financial industry that try and convince investors that they know what is going to happen. These “gurus” make boat loads of money off of unsuspecting investors wanting to believe there is someone that can tell them what is going to happen. These so called gurus are human like everyone else. Even the experts are lousy at predicting the future. | |||||||||
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| Examining Expectations - 10 Pledges for Investors (6:30) | |||||||||
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There's a lot of money to be made in the prophecy racket... or in other words, the market forecasting business. The media and the financial industry at large have to keep this illusion alive to keep making money off of investors. They need you (or your hyperactive money manager) to constantly be active and make transactions. But here's the industry's dirty little secret. Real investment success doesn't come from following the right predictions. It comes from following the right principles. • Allocate your assets properly. • Diversify your portfolio broadly. • Buy quality investments. • Avoid the scams by sticking to the basics. • Keep your investment costs reasonable with low turnover. • Maintain discipline so you can get the market rates of returns that are available to the disciplined investor. • Know the risk measurements in your portfolio so you know what to expect in up and down markets. • Rebalance when necessary on a disciplined basis, to eliminate the need to forecast and predict. • Hire an investment coach that sticks to these principals for successful lifetime investing. Yes, you can make it a lot more complicated than this. But to be successful, you really don't need to. These ten pledges are timeless. This is the stuff we teach, and is summed up nicely in the 10 pledges in this video. For the Advisor (our pledge to you): We pledge to adhere to the written Investment Policy Statement. We pledge to continue to dedicate both time and resources to investor education and have made it our mission to help you succeed for your lifetime by helping you adhere to the 10 PLEDGES FOR INVESTORS. Simply e-mail John or Scott to get your copy of the 10 Pledges For Investors. Continue to learn, stay diversified according to your risk tolerance, stay disciplined, and rebalance. Education is your best defense against imprudent investing. Invest intelligently! Dedicated to Your Peace of Mind, John Borger & Scott Buchanan Past performance is no guarantee of future results. |
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