Investor’s Have Insecurities Too
- 5 Comment
 |
I have to admit – I have felt pretty insecure about my investment strategy and my investment code in the past couple of months. As I watch the market tank taking my portfolio with it, I wonder if my strategy of investing in a core basket of index funds supplemented with only very strong dividend growth stocks is a good one. I don’t think I am alone in these insecurities. As I read the various investment blogs in my reader list, there is a general sense of doubt and stress out in the interwebs. Most people are losing money in this stock market.[ad#tdg-embedded]
The market plays wicked tricks with our minds and our human nature to be, well human. In times when the market is doing nothing but go up, then the situation is normal. Our strategy (no matter what strategy that is) works and our portfolio value rises with the market. During these times, there is no reason to doubt your skills or knowledge of investing because it all seems to so easy.
But then the situation turns nasty. Those strategies we used in the past that worked so well are no longer working. The market drops like a rock and takes our assets with it. This sucks and feels like shite! At times like these doubt enters our minds and we second guess all that research we have done. For me, that means questioning whether it is still a valid strategy to build that core portfolio of index funds. Should I start moving out of certain assets and into others? Should I buy gold instead? Has the investment world changed forever and the old rules no longer apply? What the hell do I do now?
Personally, I have decided to fight these insecurities and second guessing of my strategy. How? By keeping the two following quotes by Einstein and Benjamin Graham on my desktop:
There are only two things that are infinite; the universe and human stupidity; and I’m not sure about the universe – Einstein
The real money in investment will have to be made – as most of it has been made in the past – not out of buying and selling but owning and holding securities, receiving interest and dividends and increases in value – Graham
In other words, I don’t want to do anything stupid by ignoring known facts in the investment world and taking action when none is required. My core index investing strategy is still sound – at least I am set up to meet the market, whatever it decides to do. Let me know how you are dealing with your investment insecurities through the comment section below – I would be really interested to hear from you!
5 Comments on this post
Trackbacks
-
the weakonomist said:
I don’t have insecurities because that requires me to have emotion behind my investments. The whole premise of buying my index funds was to remove the emotion from investing.
The only time I’ll care about the actual balance of my retirement portfolio is the first day after my retirement. That is still more than 30 years away.
As for the current market, thanks to dollar cost averaging I’m going to make a killing on my investments.
March 23rd, 2009 at 5:22 am -
Dividend Growth Investor said:
Investing is primarily a psychological endeavour. The 50% drop that most buy and hold investors are experiencing is testing their strategy of long-term investing. Most will sell or switch strategies, only to get dissapointe once more.
Active trading is not a substitude for consistently making money either – i have seen many active traders lose 50% even though they stick to a strategy, before they start earning more again..
I am sticking to my strategy for the time being..March 23rd, 2009 at 7:47 am -
Rhianni32 said:
This current recession is actually what shifted me from trusting in others to manage my investing and to move to doing it myself so its been a good thing for me…. even with a 50% loss. So I don’t have insecurities as of yet as I am just starting out and dont have my own track record to measure yet.
Incidently you Div-Net guys have been a great help in my education. Thanks you for all the information.March 24th, 2009 at 6:11 am -
Manshu said:
I certainly have insecurities and I don’t try to fight them. I make a lot of mistakes in every aspect of my life, why should investing be any different?
I just try to recognize these mistakes and learn from them. Over the course of the last decade my investment strategy has changed dramatically and I am better off for it.
March 24th, 2009 at 4:30 pm -
Bob said:
While I have not done as well as I would have liked my 401k was down 9.81% last year and is up .78% this year. I do have a company match of 25% on the dollar, but the money invested in DSPP And Drips are down 44.75% since this mess started. I just keep investing each month in the dividend players and at this price the stocks are going for a huge discount.
Unlike my sister in-law who invested 2 yrs ago in a bank stock that paid no dividend then watched her solo investment go from $5000. to $800. then sold so she would not lose her money?March 25th, 2009 at 6:40 pm
