Investing can be a sore subject during, and especially after, bear markets. It follows then that we, as humans, will follow our instincts and try and better the investment experience. Why? No secret here. If an individual’s asset values have been reduced due a falling market, there are a number of life’s plans that can be significantly affected by the event. For instance, were these assets invested to coincide with a particular event, like funding college tuition, buying a second home or enabling a comfortable retirement?
Have you ever made an investment and suddenly you don’t know why? To top if off, the investment shrinks in value. You sell, realize the loss and ask “What was I thinking?”.
Experience will be a reliable guide. Unfortunately, many of us have to acquire experience personally. This means three things occur: 1) We loose money, 2) We loose time and, 3) We realize we need to know more.
To the point(s); in over thirty six years of working in the investment community, itís been my pleasure to meet some extraordinarily talented people. If you find the challenge of managing your investments of great interest and entertaining, there are advisors that focus on providing actionable information to clients for execution.
In general, Three Points Can Save Your Investments.
1. Improve your understanding of the relationships that drive markets. If you could see the impacts that one market has on another and could see then what the result would likely be, would this information be helpful to you?
2. Suppose you felt you could significantly improve your investment results if you had what you considered a reliable signal that would tell you if the stock market was going up or down. Not minute by minute, but up over the next few weeks. If you could find such a signal and the market suddenly dropped, you could buy confidently while everyone else was selling.
Why would this be of value? Think about it. When do things become ìcheapî, less expensive? The answer is when no one wants to buy. If you had 80 to 85 percent confidence, what would be possible with a reliable signal like this?
3. Suppose you were able to tighten this up even a bit more. Suppose you could take advantage of the daily market movements, working specifically inside a mid-term trend on a short term basis. If you had the percentages for success/failure on each move before you made it based on past history, (which as we all know, is no guarantee of future results), would this be helpful?
Imagine the market has started to move higher. Based upon daily research, an opportunity presents itself which based on past data suggests a 67% probability of success if you sell the market at the open and buy the market at the close. How many times have watched the market open significantly higher only to close in the trash can?
Specifically, three points of perspective:
The Broad Overview
Imagine for just a moment that you observe certain markets interacting and that this interaction when viewed previously had a future positive impact on the S&P 500 ñ the stock market, as an example. Following your observation, you now know generally what to expect will be developing. As the relationship between markets evolves, you can see it is likely the market will moveÖ higher (as an example).
The Medium Term
Next, you go to your highly reliable signal and see if it is in agreement or not. At first, this signal may disagree with the broad overview, but remember, all things take time to develop. After a while, the highly reliable clicks positive. It says ìBuyî.
The marketís internal dynamics indicate, the market is now in an overbought or oversold position. If you want to commit to a little extra work, Using a portion of your account you can now execute a short term trade inside the medium term position. You are now mining the market trend.
Can you execute with confidence? Yes. You have a basis for your decision making that has been tried and tested. This process takes patience and persistence, but it can be highly rewarding.
If executing your own trades is too cumbersome to your lifestyle, you may find that you want an advisor so that you donít personally have to devote your waking hours to the task of trying to manage your assets.
Some can design personal investment portfolios that greatly reduce risk and produce attractive gains while keeping clients comfortable, confident and happy in the financial aspect of their lives. These clients stay clients of the advisor generally for as long as they live.
These clients benefit from the advice of an advisor and they usually have him/her fully manage their accounts. They typically will also benefit from investment tax planning that helps to deliver long term capital gains while maintaining a pool of selectively and surgically harvested losses that be brought forth for use as the clientís tax situation dictates.
How does one get to know an advisor? There are listings and there are brochures. However, if you want to feel comfortable in your relationship with your advisor, you must know him/her or their company. You should watch and witness firsthand their work and the results it produces. Once you have had that experience, you can then move forward confidently into the relationship.
How long does it take to get to know an advisor? Sometimes, it can take years. Then again you can go on a hurry up campaign, but if you do, you may end up asking yourselfÖ What was the questionÖ.? Oh yes, ìWhat was I thinking?î
In the world of investing, will you be 100% successful? No. Nothing involving risk in the investment world is 100% or guaranteed. Tomorrow is always tomorrow so itís different from yesterday or today. However, you can use experience to put the odds of success on your side. If your money manager has over 30 years of investment process development experience under his or her belt, with winning outcomes, chances are if you like each other and trust each other, youíve found a home.
John Howe has worked in the financial services industry for over 36 years. He has had the opportunity to know some of the most talented world class money managers, traders and advisors and has provided seminars on investing across the country to thousands of individuals and their advisors. To learn more about, successful, profitable investing visit us =>
www.RiskRewardFinancialSolutions.com or give us a call at 508-833-1401.