Your Investment Philosophy
In looking at my last newsletter, it was tempting to just say, Ditto! Many places in the world seem to be in disarray (still) and our government is still grappling with serious challenges, not to mention our individual ones. I’m hoping that those who get this email have positive plans and are moving forward, no matter what you see on TV.
For all who have recently joined us and have not attended the Separating Myths from Truth, The Story of Investing, we will be calling you soon to invite you to a presentation. It is very important that you attend this event, for it describes exactly what you are doing and why with your money. We did go over this in our meetings. But I’ve found that it is common to forget. As your coach, it is my job to make sure all of our clients understand the basics of investing, for this forms the resolve that will carry you to success. And this isn’t information that clients are normally privy to. You will discover what Wall Street didn’t want you to know!
Your Investment Philosophy
Can it Soothe your Nerves?
I don’t know about you, but I am glad we are long-term investors–and consequently all the short-term craziness in the markets and the news is mostly irrelevant. Looking at the overall market from a historical perspective, or taking the long view, we can see the rewards for investors. If we look at the present, with the debt ceiling worries and many problems to solve, and imagine it continuing, we will likely be miserable. While the government is in turmoil–deciding the tough decisions, and watching the economy lag, there seems to be no good news.
For the short term, what does the stock market look like?
By looking at just the first 7 months of this year, we see how a short-term outlook can put you on an emotional roller coaster.
Mid-Feb. +6.0%
Mar-Apr. - 6.5%
Late Apr. + 8.0%
Mid June - 7.0%
July 1 + 7.5%
July 29 -8.0%
Is your head spinning yet?
Things to keep in mind:
We have the biggest economy in the world, with only 5% of the world’s population! The general, long-term expansion of our economy is strong and continuing. It would take an unpredictable cataclysmic event to change this course permanently.
The short-term moves of the market mean nothing in the overall expansion, but, being human, we tend to look myopically at just what is before us.
It is helpful to remember too that the politicians are well-aware of our eyes on them, and they are all posturing, and I believe, exaggerating their views so we will know how hard they are working and how hard their choices are. We can always say, “Oh but this time it is different, this is really serious, we’ve never been here before.” Yet I’ve heard this many, many times. We do get through it. It fades into the past.
Wall Street keeps us off-balance by creating the impression that we must keep making changes to our portfolios. The media thrives on the short term, urgent viewpoint, keeping the viewer glued to the TV with a continual flow of breaking news and words like dire, catastrophic, disastrous, and suggestions of market plunges.
When an investor has an investment philosophy that includes a defined strategy, and uses this strategy to manage his money, he is following a plan that he can adhere to, no matter who is in office, what the government does, and what cycle the economy is in.
An investment philosophy should give the investor peace of mind.
This is how we at Osprey look at it anyway. There will always be those whose investment philosophy says you can ‘beat’ the market and make a windfall in the short-term. This sets up high expectations and likely failure.
We don’t buy that approach. We know holding a solid, highly diversified portfolio, invested globally, while committed to the long-term, will weather any temporary crises.
Every few years we have declines. While in the decline our returns are pulled down temporarily. But during the next bull market the values rise again, just like a cork in the water.
If you are a client of Osprey Money Management we have a wealth of information in our library in addition to the seminars we conduct. If you would like to check out a DVD or book on investing with our philosophy, so you can quit worrying get on with your life, please let us know. We can send you a list of resources too.
This entry was posted on Thursday, August 4th, 2011 at 1:59 pm and is filed under Newsletters.
