How to Avoid Getting Sick From Financial Markets
Start with understanding what can, and cannot, be controlled.
Bloomberg, June 20, 2018
We discuss why its important to understand what you do and do not control, and prioritizing your time and efforts on thw latter.
What is not in your control ?
- Market moves;
- Corporate profits;
- Federal Reserve interest-rate decisions;
- Nonfarm payrolls;
- Whether the next “Star Wars” movie is any good;
- Gross domestic product;
- Brexit, Grexit, Italeave;
- Middle East peace;
- Home or retail sales;
- Who wins the NBA finals, the Super Bowl, World Series or the World Cup;
- Presidential tweets.
What is in your control?
- Developing an investment philosophy;
- Asset allocation;
- Turnover of financial holdings;
- Fees, commissions, expenses and capital gains taxes;
- Media consumed, both quantity and quality;
- Understanding that markets go up and down;
- Your hopes, expectations, motivations, goals;
- What else is in your portfolio;
- Having any sort of long-term plan and staying with it;
- Books that you read;
- How much risk you are willing to assume;
- Your own behavior;
- Your emotional reaction to events.
See the full column here: How to Avoid Getting Sick From Financial Markets