Discipline and Patience

Feb 20th, 2012

As you are no doubt aware, stocks have experienced much volatility over the last few years.  This is a good time to remember that the market doesn’t deliver returns in a straight line.  Market ups and downs are normal, and it takes a lot of them to balance out to the average.   

Investing based on facts, not emotions

Emotions–including our own–should not have a role in making decisions about your investments. That is why we do not act on stock tips, guess where the market will be in six months or try to predict the direction of interest rates. We have always said that we will not play guessing games with our client’s life savings.

We are planners, not prognosticators.  We help people with long-term financial planning, not short-term speculating.  It’s evident that no matter how much time and energy we or anyone else put into studying the market and economy, no one knows what it’s going to do in the short run, but we do know what it’s done in the long run.

Everything we do in an investment portfolio is based on using decades of academic research to identify an optimal mix of assets and make investment shifts accordingly. We rely on science, rather than emotions and predictions.  We construct a portfolio based on things like your long-term financial goals, time horizon and risk tolerance, not speculating on what the market or economy will do or reacting to what they have done. Our goal is prudent investing for long-term performance using rigorous investment discipline, regardless of the economic and market winds.

Patience and discipline are two of the most important factors for long-term investing success.  It is at times like these that patience and discipline become most important, but it is also when they can be the most difficult to practice.

We encourage you to not let your emotions get the better of you.  In this day and age of 24 hour news coverage it can be difficult to look past troubling headlines, market volatility and dropping portfolio values.  Do not get caught up in the fear and panic of the moment.  This is when mistakes are made that can lead to a permanent loss of capital.  Rather, remember the objective of your portfolio and stay focused on your long-term goals. 

Also, for those of you who are still contributing to your investments, whether through your 401(k), IRA or other investments, you should welcome market volatility as an opportunity to purchase more shares at a lower price.

Investments are subject to risk, including the loss of principal. Because investment return and principal value fluctuate, shares may be worth more or less than their original value. Some investments are not suitable for all investors, and there is no guarantee that any investing goal will be met. Past performance is no guarantee of future results. Talk to your financial advisor before making any investing decisions

Asset allocation programs do not assure a profit or protect against loss in declining markets. No program can guarantee that any objective or goal will be achieved

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