Does Your Investment Plan Rely on Luck? – Dave Young


Our experience and independent research both show that most investors do not follow a strategy. In other words, they do not have a disciplined, systematic process they follow to make investment decisions. Their portfolio of investments often represents a patchwork of uncorrelated ideas that were sold to them by various salesmen over their lifetime.  What may have seemed like a good idea at the time no longer makes any sense.

Take for example the first three months of 2016.  Markets have been in turmoil with the S&P 500 dropping -10.5% and the NASDAQ losing -14.8%.  After hitting their lows for the year both indexes have recovered about 10% of their value, erasing much of their losses.

Without a strategy it’s difficult to capitalize when the market drops and recovers.  Even worse, if you sold out during the drop, you are down 10-15%.  This is why following a solid strategy is so important to your long-term success.  To be clear, luck is not a strategy.

There are two steps to follow when making a long-term strategy:

Step 1- Properly select your risk tolerance.

Decide in advance how much risk you can subject your account to. For some investors this means… (read the rest of the story)


Originally published on Utah Valley Health and Wellness

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