Any handyman knows that you must have the correct tools in order to effectively complete the task at hand.
As somebody who is less than handy, I have learned over the last few years how true that statement is. As most people with the same skill set, I only have the basic tools: one hammer, a couple of screwdrivers, and the all-important wrench. The only task that I handle with any competence is painting. I learned later that is typical skill of the Irish.
However, my new son-in-law, Kevin, is quite handy. When he visits with my daughter Julianne, he frequently is called upon to complete some household tasks. What I’ve come to appreciate is the importance and need to have the correct tools in order to accomplish these tasks effectively and efficiently. Often Kevin must bring his tools or his father’s tools to complete the task.
I believe most investors are not using the proper tools when examining their investment portfolios. For many individuals, their portfolios have a healthy portion invested in the shares of the great companies of the world known as stocks.
This allocation is appropriate especially for those who have a long-term perspective such as retirement or college planning for a young child. While the long-term historic returns for stocks have increased above the cost of living increases, the short-term stocks have declined considerably. For long-term investors, this should not be a concern.
However, I believe that investors are using the wrong tool often encouraged by the media attempting to sell ads and increase viewership. The appropriate tool to use would be more in tune to a telescope where you can see a perspective that is much longer and much more appropriate.
When investors look at the daily. weekly, and even monthly returns of stocks, it is the equivalent of using a microscope to examine their portfolios. This tool and constant oversight are not appropriate. In fact, most often it is harmful to investor returns.
Investors do not need the onslaught of individuals on television pontificating complete and utter nonsense. They give their opinions as if they have any ability to determine when the stock market will increase or decrease.
Using this information without regard to your own personal circumstances, is similar to my approach of using whatever limited tools I have for every project. It’s not a good fit.
Are you using the right tools? Visit with us to make sure.
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