On Tipping (Part 1)

Psst: want a quick stock tip?

Photo: Stuart J. Whitmore. Source: Morguefile

Lots of folks ask me for a quick tip. It’s natural when they hear that I help people manage their money. After all, if you can find the next 10-bagger before it goes parabolic, you could spin the straw of your savings account into retirement gold. Or we think.

But investing isn’t like that. It’s not about getting lucky. When we invest, we put our money to work among economic enterprises where we don’t know the future. That’s an inherently risky undertaking. So many things can go wrong: the economy could fall into recession, gridlock might shut the government down, fickle consumer tastes can change.

But competent business managers can cope with change and even thrive. And contrary to Dilbert’s vision of the pointy-haired boss, most managers are competent. That’s why IBM has been able to reinvent itself four times during the last four decades. That’s why Apple could create the whole notion of mobile computing. A growing economy means more good things happen than bad things. We just don’t know what we don’t know.

Photo: Laura Musikanski. Source: Morguefile

But what we do know is our own plans and aspirations. If we understand ourselves—what we need, how much risk we can handle, how soon we need the money—that knowledge implies certain things about how to invest and what to buy and sell. That’s why investment advice should be tailored to the person receiving it. Not everyone can handle investing in tech stocks. Not everyone should. Sound investment decisions grow out of a deep understanding of our present and future financial assets, liabilities, income, and expenses. It’s more like accounting than gambling.

So, want a quick investment tip? Make a plan.

Douglas R. Tengdin, CFA

Chief Investment Officer

By | 2017-07-17T12:21:53+00:00 July 20th, 2016|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
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