Roses are red, violets are blue, your stocks don’t love you.
Ok, that didn’t rhyme as well as I would have liked, but since love is in the air, today is a great day to talk about taking your emotions out of investing and into places where it will be more mutual.
Too many investors expect everlasting devotion and love from their stocks when in reality a stock isn’t smitten when you buy it and doesn’t cry when you break up with it. I know this sounds somewhat ridiculous but acknowledging that our emotions are very one-sided when it comes to the investor-portfolio relationship is key.
We’ve been conditioned to expect instant gratification and believe that if we buy into an investment, it should go up…humour me with a sample love note to your portfolio holdings:
You’re special. I’ve picked you to be in my portfolio and as such expect that you will always increase in value, make me lots and lots of money and never leave me.
I love you.
Love and emotions have nothing to do with the market – but as intelligent human beings we are naturally very emotional with our money – which is where the lines become blurred.
I tell all of my clients (especially before we make it official) that liking and trusting one another is critical to our long term relationship because of the innate risk inherit to the entire market (known as systemic risk). Your portfolio will go up and down in value but with professional guidance, strategic research, proper diversification, a disciplined asset allocation and a proper financial plan, your investments will show you that love you expect today, over time.
In the mean time, should you be seeking a more mutual love, here is a great article on getting financially intimate with your special someone; with money being cited as the top cause of divorce, it’s worth a read to ensure your marital – and financial – bliss.
Happy Valentine's Day and Family Day long weekend.
Enjoy the weekend.
Investment & Wealth Advisor
Chaaban Wealth Management Group