What Now?

What should investors do now?

Whenever the markets get crazy people ask how they should react to the craziness. But that’s the wrong question. The question is not how folks should respond—it’s what should investors have done to prepare. Investment is a forward-looking process. Markets try to anticipate the next set of data. Sometimes they get it wrong, which is why the stock market has predicted 10 of the last 5 recessions. But if you react to the markets’ craziness, you’ll go crazy yourself.

Stressing out over the economy is no way to invest—and it’s no way to live. A portfolio should be your servant, not your master. It should provide the income, or growth, or stability to help you do what you want in life—not the agita or heartburn or anxiety to cut your life short.

Cycles happen. Businesses get overconfident and overinvest when demand doesn’t justify the capacity, then they cut back and get overly cautious. The truth, as always, is somewhere in the middle. And so we cycle through bouts of optimism, mania, contraction, panic, skepticism, and optimism again. Investors should have a plan that anticipates these regular cycles.

Managing money is really about managing risk. And the first step in managing risk is managing yourself—what your needs are, what your goals are, and what your resources and limitations are. A sensible investment plan takes all these things into account. So when times like these hit and people wonder how you can be so calm you can smile to yourself.

Investment isn’t so hard; it’s planning that’s the real work.

Douglas R. Tengdin, CFA
Chief Investment Officer
Hit reply if you have any questions—I read them all!

Follow me on Twitter @GlobalMarketUpd

direct: 603-252-6509
reception: 603-224-1350

www.chartertrust.com • www.moneybasicsradio.com • www.globalmarketupdate.net
By | 2014-09-11T10:00:33+00:00 September 26th, 2011|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. –
Leave a comment if you have any questions—I read them all!
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