I have season tickets to the New York Jets. Yes I know, an average year so far. But this post is not about the patience that is required to be both an investor as well as a Jet fan, but rather deals with the pregame entertainment that goes on at the beginning of every Jet home game, both in the stadium and on television.
Before every game is played, the radio announcers tape a segment where they discuss the keys to today’s match-up and, having gone to more home games than I care to mention, one aspect of these “keys to today’s match-up” became very clear. Regardless if we were playing San Francisco 49ers, the New England Patriots, or the Detroit Lions, the keys to successfully winning the game were always the same.
The Jets would need to protect the quarterback (whoever it may be), run the ball and stop the run, and of course, win the turnover battle. Week to week, they would adjust the order of the keys, but they were always the same keys to success.
The keys to successful investing – regardless of the market conditions at the moment – are always the same as well.
So here are my 6 keys to today’s investment matchup. You may notice that they’ll be the same next year and the year after that – sort of like my own personal Groundhog Day.
- Clarify what it is that you are trying to achieve, especially in the long-term. You have to know where you are trying to get to in order to plan your journey. Develop a plan to achieve these desires.
- Avoid self-destructive behavior such as chasing high-performing investment categories or making major tweaks to your long-term investment plan based on current conditions. Having clarified the plan should help you keep focused on the long-term.
- Understand that crises are inevitable. As part of our on-boarding process for clients, we take them through a fire drill to show that they should expect the stock market to be volatile, and at times uncomfortably so, and what actions we will take during those times. Surprise is the Mother of panic.
- Don’t attempt to time the markets. Not only is it very unlikely that you will be able to do so; more importantly, it is not necessary in order to achieve the investment performance that you will need to reach your goals.
- Don’t let emotions guide your investment decisions. Work with the behavioral advisor to ensure that your decisions are grounded is what’s best to achieve your plan. It is hard not to be emotional about your own money which is why it’s important to have an independent financial advisor helping guide you especially during the inevitably difficult times.
- Disregard short-term forecasts and predictions. “Its tough to make predictions ..especially about the future” – Yogi Berra. Let the long-term historical record of the markets be your guide – both in short-term and long-term. Focus your energy on developing the appropriate plan for your circumstances.
The major difference between these keys to investor success and the keys to today’s football match-up is that if the investor follows these keys they will, in fact, have a much better chance of being successful. Oh if it was only so easy for my beloved Jets.
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