Some people are just lucky. Maybe they were born with amazing athletic
ability, excellent timing, or a knack for thinking many moves ahead. Luck
and timing have launched many successful people, but for most of us, it
takes grit, fortitude, and a whole lot of planning to reach our goals. Life is
teeming with opportunities and pitfalls, and those who make a plan and
choose a strategy to achieve what they aspire to be will be the most
successful.
For investors, navigating the volatility of the stock market can feel like
sailing through turbulence without a compass. Having a solid investment
strategy can steer you in the right direction.
Strategies are essential in sports. Imagine if a basketball team played
Imagine driving your car through thick fog, unable to see more than a few
feet ahead. It is disorienting and stressful and will cause you to second-guess your decisions. Now, picture yourself with a clear roadmap and GPS guiding you through the fog. It will give you confidence in your direction and reassure you that you will reach your destination despite the uncertainty.
Having an investment strategy is like having that GPS in the investment
marketplace. When the markets get foggy and unpredictable, you will have a clear plan in place, keeping you focused on your long-term objectives while guiding you through the murkiness.
We have all experienced the temptation to impulse buy during a sale or a
bout of retail therapy as a coping reaction to stress or sadness. The regret
comes later when you realize you didn’t really need the item—oh, the
buyer's remorse!
Investing based on emotions can lead to similar regrettable decisions. Too many outside factors are meant to toy with your rationality and
emotions—they can make you reactionary and impulsive if you don’t have
strategies in place for when you do feel emotional about buying or selling a position.
A well-defined investment strategy helps you stay disciplined and avoid
emotional pitfalls. It’s like having a predetermined budget and a shopping
list before entering a store. You stick to your plan, avoid impulse purchases, and make rational decisions based on your needs and priorities. Having predetermined rules for buying, selling, and rebalancing is what will get you through emotional times.
Just as chefs carefully balance flavors and cooking times to ensure culinary success, investors manage risk to protect their investment capital and achieve long-term success. Diversifying your portfolio across different asset classes and sectors through the use of managed accounts that use multiple strategies helps minimize the impacts of market volatility, much like balancing ingredients in a recipe. Learn more about our risk-managed approach.
Implementing a strategy takes patience. The positive results don’t always
come right away. Make an honest assessment of your goals with the money you invest. Look at the amount of time you have to see those goals get reached. Get real with yourself about how much volatility you can handle. Find a manager who can help you with these assessments and help you chart a path to reach these goals.
A great example of this is Moneyball by Michael Lewis. You can read the
book or watch the movie. It retells the true story of the Oakland A’s
charting a new path to success using algorithms and innovative thinking.
Everyone thought they were crazy, but in time it proved to be a system that is still used today by some of the most successful Major League baseball teams. Patience and endurance led to success.
Having a strategy when investing is crucial for achieving your financial
goals. It provides clarity amidst uncertainty, helps you stay disciplined,
avoids emotional pitfalls, manages risk effectively, and positions you for
long-term success.
Vineyard Global Advisors portfolios are individually constructed to fit your goals:
Vineyard Global Advisors offers 13 fee-only, actively managed,
including hedged and long-only investment strategies via
separately managed accounts. Contact Us to learn more.
