By Alan Steel
Jeff Miller over at A Dash of Insight sets out a nice reality break about the practice of “profiting from fear” versus taking the road less traveled.
“Throughout the big rally investors have been bombarded for reasons not to join in. It is very profitable to play upon fears. You then sell page views and advertising, conferences, gold, annuities, or fancy structured products.
“I have taken a much less popular path – trying to educate investors. Even though the issues at hand are the most important, much more significant than individual stock selection, it is not ‘actionable investor advice’.”
Unfortunately, it’s the latter point that folks tend to want – something they can do right away to make them immediately wealthy.
But it doesn’t work like that.
It’s that type of thinking that’s symptomatic of why most investors fail to capture even a fraction of what the markets could give them as returns.
Devotees of instant success and impending disaster are more easily influenced by those factors that Jeff mentions above; fear-inspiring articles, the urge to seek safety in asset classes that don’t actually provide any, falling to victim to well-named products that sound good but don’t really mean anything, and becoming an armchair investor following celebrity TV analysts whose dire investment predictions are borderline comedy.
In fact, here’s an insight into what I mean. It’s a wonderfully amusing Bird and Fortune video about what caused the sub-prime crisis, and who really paid for it (click here or on the picture below to watch the video):
The 20-Year “Overnight Millionaire”
It takes time and planning and then sticking to that time frame and the financial goals you want to achieve.
Sounds boring, eh? Good investment practice often is. But long-term objective setting leads to success. And it’s one of the three main reasons for sitting down with someone like an independent financial adviser who can help you:
- Create a plan based on what you want, with someone who has decades of investment experience and success in doing so,
- Understand risk and how the markets really work in the short and long term, so that you’re less inclined to lose wealth through knee-jerk reactions, and
- Ensure you stay on course.
So, as you hear this week about dour corporate earnings, the safety of Gold, Trump’s on-going 100 days, the predictions of stock market Armageddon and other such tripe, do yourself a favour and sit down with someone who can give you a different perspective.
You owe that to yourself.
Because after all, it’s your money.
Alan Steel, Chairman, Alan Steel Asset Management