Tracy Davidson

Decisions, decisions, decisions I estimate that we make some where between 50-100 decisions per day. Most of the decisions that we make are small ones, others require some thought. When we try to make a decision that require thought we try to make it carefully. We may enlist the help of friends and family or do research to try to come out with the best possible outcome. Regardless of the amount of effort we take in making decisions, some of them will not be the outcome we would like to have. Some of the decision we make will create character with others we will gain confidence. When we make a bad decision, we tend to try to correct the choice we made quickly and get back to breakeven.

OK Erwin what’s the point. Ok, here is the point. After the terrible year we had in the markets people tend to want to recover from the losses they may have experienced quickly. With the markets having a run up over the last 10 weeks, investors may try to recover what they lost over the last few years. This is understandable, after all you have worked for a very long time in pursuit of your dreams with wonderful plans for your retirement, which may include traveling or other plans you may have. However, this market has gone up without any real substance, for example employment increases. The market is very unforgiving; it does not care about your plans, your lifestyle or anything else.

Be careful, when trying to rebuild a devastated portfolio the decision you make at this point need to be made with extreme caution. This is not a decision you want to make to try to correct quickly or to try to recover the money you lost. Although the market has gone up over the last 10 weeks, it is not the “all clear to jump in sign”. Review your portfolio; understand what quantitative risk you can take, meaning how much you can afford to lose before you have to make changes to your lifestyle. Ask yourself and your spouse, what you can afford to lose and if you are willing to do so. Do this before you make your next move. The money that was lost in the market can not be regained quickly without taking significant risk. Be real careful with rebuilding your portfolio, I can not tell you how many clients that have come to me with accounts that are built on fear. Many financial advisors are building “fear portfolios” and the cost is you and your lifestyle. Ladies be real careful if you are doing this alone, because of how women are wired they are more likely to have “fear portfolio” that may not be in your best interest and can be more hurtful than helpful in the long run. I will blog about women and investments later.

When making decisions to rebuild your portfolio, control the urge to want to correct this decision quickly or try to regain your losses quickly. Try to keep your emotions in check. You can rebuild a beat-up portfolio, slowly. It will take time, patience and a defined investment discipline. Remember don’t stand still, money never sleep nor does it wait for you. Take a define investment approach that you can sleep with to rebuild your portfolio.

Erwin B. Gant, President

Gant Private Financial Management

Tags: consumer, economy, finance