With all the tweets and blogs and talking-heads and junk mail proclaiming the next new era or the turn in the market, what is an investor to do? How can we stay tuned in to the market without being distracted by all the noise?
The first step is to understand that most of what’s on the airwaves is static—background verbal clutter of no more consequence than elevator music. The real news that matters for your investing is news you already know: you just had a child and need to start a college fund; you just turned 50 and can increase your retirement savings contributions; an elderly parent needs to arrange finances to reduce taxes.
The most significant investment decisions are driven by life circumstances. And while those don’t usually make the 10 o’clock news, they’re what we need to concentrate on when we allocate assets, think about investment styles, and even pick stocks and bonds. An effective investment policy starts with the investor.
Sunday morning talk shows may be important for public policy, but your evening kitchen-table talk is what matters most to your investment policy.
Douglas R. Tengdin, CFA
Chief Investment Officer