Friday, August 14, 2015

When Investors Make Mistakes

This is one of those times to be very careful. By this I mean don't let your emotions con you into making a bad decision. We have pretty much gone sideways to slightly down this year. As a result, investors get impatient and think they have to do something. Here is the thing. If the overall market is going sideways, then there isn't a new adviser that is going to do any better. If you think there is, then you are being lied to by that advisor. If the overall market is in the doldrums, then a new financial advisor is not going to change the market's performance. Think about it. If your portfolio is properly diversified, then changing to another "better" diversified portfolio is not going to do anything for your portfolio's performance. It is most likely going to perform similarly. I have analyzed portfolios over and over trying to make them better, but there is not a smidgeon of differences in most cases by tweaking large cap or mid cap or emerging markets. If you are properly diversified, then this means you are more than likely not going to have a large position in any one asset class. If this is true, then going from 10% to 5% or vice versa is not going to make much of a difference in your portfolio's performance. The point is to stay invested. Stay properly diversified and remember that a new financial advisor is not the answer.