Separating fact from fiction is sometimes an impossible task – and one that got me thinking...
Separating fact from fiction is sometimes an impossible task – and one that got me thinking that it’s really important to know what’s real and what’s fake when it comes to investing.
Keeping things real.
There are 2 types of investors 1) real investors and 2) fake investors. I see you firmly in group 1, but sitting in this group takes nerves of steel and a strong constitution as the non-stop wooden spoon banging on a saucepan noise goes on and on around you.
So, here are my top reasons that prove you are in fact a real investor…
Fake investors are fooled by what they hear and, believe the nonstop chitter chatter. I’d be the first to admit this can be very disconcerting – but treat it like a Lee Evans comedy routine, loosely based on the truth, but definitely embellished to make it more interesting and entertaining. It’s certainly not useful, it’s frenetic and you certainly wouldn’t make an important decision based on it.
Fake investors think it makes sense to change their investments based on politics and, there’s no shortage of politics and headline grabbers right now. But you know that the time to make changes to your investments is based on what happens in your own lives – If your goals change or there’s a fundamental change in your financial situation, consider an alteration then.
Fake investors monitor their investments obsessively. The result tends to be poorly thought out, knee jerk reactions We both know that it’s best not to keep opening the oven when you’re baking a sponge cake – continues checking doesn’t help it rise.
Fake investors talk the talk and listen to the talkers too – “alpha, beta, market cap, time horizon, long this, short that”. It sounds impressive, but in reality it’s just a collection of words that don’t mean anything. You know saying isn’t the same as doing – and what you’re doing is sticking to your financial plan.
Fake investors worry endlessly about some far-off part of the world and the impact global politics have on their portfolio. Real investors focus on the things they can control, like saving a bit more next year, keeping their investment costs low, and managing their behaviour.
Fake investors endlessly think about volatility in the market and external actions that have a short-term impact on the big bets they have made on individual stocks. Real investors take the long view. Between 1996 and 2016, markets were up more than 180 percent. That included the financial crisis of 2008. Real Investors saw that crisis as a dip; not the end of the world.
I’m not here to tell you to stop watching the financial news, but I am saying don’t act on it. And, back to my cake analogy – follow the recipe, get the oven temperature right, sit tight and only remove it once it’s baked to perfection.
The value of an investment may fall as well as rise. You may get back less than the original amount invested. It is therefore important that you understand the risks and commitments.
Past performance is not indicative of future performance.
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