A Financial Health Check


At the beginning of each training camp, Vince Lombardi would tell his players, “Gentleman, this is a football.” Then he would say they wouldn’t see it again until they had mastered the fundamentals of the game. That point really hits what we do as advisors at Paul Winkler Inc. – which is to get you to focus, not on the short run, but what your overall goals are. While the market has been positive recently, it’s only a matter of time before we see down markets again. Here are a few steps to help you avoid sabotaging your portfolio.   

Don’t lose your perspective. In the last forty-five years a globally allocated 60/40 stock/bond portfolio has never had a negative rolling five-year return. Resisting recency bias (i.e. thinking about what the market did in 2008) is the greatest struggle for most investors. You don’t have to be irrationally long-term, but focusing on the short-term is just as irrational. Remember why the portfolio allocation was structured, and realizing there are bumps (volatility) along the way. Continue to work closely with your advisor to make sure planning goals are on track. 

Turn off the news. Most of the financial media isn’t there to help you. They are there to get your attention to earn a profit selling ad placements. There is no emotion more powerful than fear. This is why financial TV ratings surge during bear markets. You tune in, get scared, get caught in the hysteria, sell in, panic, rinse, wash, repeat.

Stop looking at your account. A research firm found that investors who don’t log into their accounts perform better than investors who login regularly. Logging in and incessantly focusing on your portfolio is about the best way to ensure you become a victim of recency bias. If you have a reasonable plan in place, you need to let time do the heavy lifting.

Focus on something else. Get your mind off the short-term swings in the market. There is nothing you can do to control the markets. Excessive activity is the illusion of control during the course of creating inefficient portfolio frictions. Get your mind off your portfolio by focusing on hobbies or work.

Sound familiar? Feel free to give our Gallatin office a call at 615.461.8653, or check us out at paulwinkler.com. We can set up a free initial consultation to determine if our office can help you.

Until next month,
Jonathan Walker, CFP
®, RICP®

*Advisory services offered through Paul Winkler, Inc. (“PWI”), a Registered Investment Advisor. PWI does not provide tax or legal advice; please consult your tax or legal advisor regarding your particular situation. This information is provided for informational purposes only and should not be construed to be a solicitation for the purchase or sale of any securities.

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