No matter how wacky things get in the market it’s very, very important that you stay in control that you keep an eye on what you own, periodically reviewing what you have. Describe your ten minutes together, is just to clam a lot of people down and put things into perspective.
I‘ve started getting involved in the stock market in the early 70s when I became a broker, a financial planner in Boston a hundred years ago. So I’ve been around for all sorts of bull and bear market cycles, but it’s been really, really tricky the last couple of years and very, very difficult to invest because one of the problem is an awful lot of investors in fact TIA did an investors survey relating to cross. It was a really good survey and an awful lot of people were saying they just don’t trust a lot of people in the financial service. They are great people in financial service business. Money managers, am I getting a fair shape? Is my financial planner really out for me? Many of them are by the way these are very good ones, sort of on my own.
So I want you to just step back and let’s talk about a couple of—let’s talk about some sort of rules of the road no matter how volatile the market will get and how you either on stock individually or mutual funds or bonds or whatever. And I think the one thing I want to make most clear to you we call it, we’ve been calling it this for 20 years maybe more the old sleep quotient. Forget the markets for a second, how comfortable do you feel what you own? Can you sleep at night? Are you worried about it all the time? Are you checking the papers everyday? Are you calling your financial planner, your broker or your Uncle Louie talking about what you own? You’re uncomfortable! Then consider getting more comfortable may be getting more conservative and not worrying about every single market imagination.
An awful lot of people again during these volatile times, they are concern because they don’t know what they own. They are concern because they haven’t taken the time to learn what they have invested in. They are concern because they haven’t taken a long term view. They are concern because they haven’t been concern. They haven’t made the effort. Get concern! Periodic review with your financial planner, understand what you own. Understand why what you own goes up and down. What do you own? What do you own that is influenced by interest rates? What do you own that’s tested by currencies? Rely on solid research not hot tips.
You know let me tell you it’s hard to figure out the information that you’re getting from some old financial services etcetera. You know some are very good by the way. I mean there’s been some bad, bad publicity in the past people saying stuff that they didn’t believe or saying stuff because they want to build a relationship in their invest banking department. One vaguely source is you can get in the library. Many large libraries are free, Value Line Investment Survey—some very, very good information.
Go with stocks and investments that you know. About the sleep quotient again—go with investments that you understand. If you understand what they do, what makes them fluctuate then you’re not going to feel as wacky as most people do when things fluctuate.
Daria and I do a talk a presentation all over the country called “Boomer Angst” answering questions with the timely money issues related to baby boomers. And one of the things we talked about and we use boomers as example will thrill anybody. Two of their primary goals are managing risk, how much money should I put at risk and how much risk should I put it at and distributing assets. So it’s very, very important and I know a lot of you don’t even want to talk about money and stuff. You don’t want to talk about investing in your portfolio and stuff. I’m going to tell you folks start getting interested because if you think social security is going to be a big pension plan you’re in trouble. If you think your pension plan is going to be a pension plan be careful. Over 20,000 people have been laid off because the sub-prime mortgage mess. They were there rocking a couple of years ago. Laid off what, things happen.
And another thing I think that’s going to make you feel more comfortable is if you invest regularly. Heck even if your own dividend paying stocks we’re going to talk about dividend stocks in another little video because we like it a lot. Again, getting more in control, okay, dividend paying stocks if you invest in dividends listen to this; this is how simple this is. If you invested dividends in stocks that you own instead of getting a dollar or $2.00 or $50.00 or $100.00 you’re reinvesting the stock with dollar cost averaging by reinvesting the dividends and stocks.
Two things, you will feel better no matter what the market does. Third thing, maintain realistic expectations. The stock market—I’m not talking bonds. The stock market empirically, historically since the turn of the century about 10% per year. Don’t chase performance steady road and diversified. You’ve heard this stuff, diversified. You’ve heard this before. All we’re trying to do is calm you a little bit and by the same time educate you. Slow is the best way. Understand what you own, invest regularly, set realistic expectations and take a hand in your own future. No matter what the market does, you know that you’re under control because you know what you have and you know why what you have moves.
So relax, but don’t forget one thing the Dolan Sleep Quotient. Can I sleep night? Do I feel comfortable with my investments, okay, pleasant dreams.
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