Old school wisdom for the new world of investing

Nowadays there is no lack of information on the web and no lack of ego and opinions than when it comes to investing. Today, an internet search of the word “investing” generates 321 million results in .55 seconds. This engorgement of information makes it difficult to sift through to find the truly valuable material.
All this knowledge but very little wisdom. On the other hand, the information below is timeless and can be applied regardless of what the market is doing.

1. Don’t try to time the market.

This means waiting for the market to go down until you invest or pulling money out when you think the market will go down.

The New York Stock Exchange opened in 1792, and since the beginning of public investing no one has been able to consistently and successfully time the market. If you think you know something that no one else does, you don’t. Sorry! But it’s the truth.

Don’t take it from me, though; take it from the greats:

 “Far more money has been lost by investors preparing for the corrections, or trying to anticipate corrections, than has been lost in corrections themselves.”

Business magnate, investor, and philanthropist

“I can’t recall ever once having seen the name of a market timer on Forbes’ annual list of the richest people in the world.  If it were truly possible to predict corrections, you’d think somebody would have made billions by doing it.”

Investor, mutual fund manager, and philanthropist

“A decade of results throws cold water on the notion that strategists exhibit any special ability to time the market.”


2. Be skeptical of get-rich-quick schemes.

If something seems too good to be true, it probably is. If an investment is up 1000% in a year, it can go down 1000% per year. This is called volatility, and if an investment is volatile, it is risky.

Anything that you put into a highly volatile investment is something you should be comfortable losing.

If the word on the street is that there is an investment phenomenon that has high returns and little risk, that is something to be cautious of.

To be clear, I not saying never make risky investments, I am just saying make sure you understand the risk of the investments you make.

“Speculation is most dangerous when it looks the easiest.”

Business magnate, investor, and philanthropist

3. Be wary of arrogance—that of your own and that of others.

We have been in a nine-year bull market, which means we have a lot of winners out there, for the time being….  After having picked winners for so long, there have been many out there that feel they have cracked the code, so to speak, but they are not doing anything special. Many will confuse luck with skill and be lost when the next correction rolls around.

“In a bull market, one must avoid the error of the preening duck that quacks boastfully after a torrential rainstorm, thinking that its paddling skills have caused it to rise in the world.  A right-thinking duck would instead compare its position after the downpour to that of the other ducks on the pond.”

Business magnate, investor, and philanthropist

4. Make sure your investment portfolio has a purpose.

The sole purpose of your portfolio is to support what you are trying to accomplish financially and in life. The purpose for your dollars will dictate how they are to be invested.

Maybe they are for retirement, for the down payment on a house, or to be passed down to your children or their children. All these different scenarios would mandate a different investment plan and allocation.

No matter the level of wealth you possess, the sole purpose of your investments are to support the plan.

“All of financial success comes from acting on a plan. A lot of financial failure comes from reacting to the market.”

Financial advisor and author

5. Seek the guidance of a trusted and competent financial professional.

This last one may come as a shock to you, but I would obviously recommend working with trustworthy and competent professional who can take the emotion out of your investing and provide an objective look at portfolio.

The right person can help educate you on how accomplish what you want with your investments.

“The best-performing equity fund delivered 40% over the last three-year period as of April 2022. An average investor in this fund made only 20%, so the gap is half. Around 75% of inflows into this fund came only in the last one year.”

Investment specialist

Luke Strode, CFP®

Author: Luke Strode, CFP®

Luke Strode serves as an original member of the North Star Resource Group – Scottsdale Division, a boutique, client-centric, integrity-driven, holistic financial planning and wealth management practice to cater to the needs of high income and high net worth individuals and their families.

Registered Representative of Cetera Advisor Networks, LLC and Investment Advisor Representative of Cetera Investment Advisers, LLC.

Luke is a registered representative and investment advisor representative of Securian Financial Services, Inc. 4840765/DOFU 7-2022