Vail Valley: Can you take emotion out of your investing | VailDaily.com
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Vail Valley: Can you take emotion out of your investing

Shawn WeatherredVail, CO, Colorado

When it comes to investing and planning for your future, Vail Valley residents need to take their emotions out of the equation. This can be much easier said than done but making investment decisions based on emotions can lead to buying high and selling low. Standard & Poors reports that over the past 20 years more money is put into equities when the S&P was up and less money was invested when the S&P was down. This means that when the market is down people are not investing and when the markets are up people are willing to invest. This goes against conventional wisdom to buy low and sell high. The S&P 500 index is now selling at roughly 1997 prices. Wouldnt it be nice to buy other things at 12-year-old prices?Keep a long term view During times of market volatility you need to maintain a long term view of the market and your investments. History shows us two things: That a bear (down) market will return to a bull (up) market and that bear markets have lasted roughly half as long as bull markets (Source: Dow Jones Stock Traders Almanac 2008) If you are buying during the bear market you will regain your lost value faster and be in a better position to profit in an extended market rebound.Dont chase the marketGo back and look at the goals you set when you started investing. Have they changed or are you holding back out of fear? Trying to predict the bottom of the market is virtually impossible. If you try to guess the perfect time to get back into the market you are taking a huge risk, probably a bigger risk than you normally accept in your investments. There is a large amount of money sitting on the sidelines (i.e. held in cash) right now, waiting to re-enter the market. When this money returns to the market we may see substantial gains. Wait until after this money returns and you could miss out on a great opportunity. If you follow the media, as most of us do, be sure you filter out the news from the noise. You need to realize that if you wait for the media to talk about a rebound then it will have most likely already happened. If you usually make regular periodic investments try not to stop, even if you have to decrease the amount you invest. If you have money waiting to re-enter the market, talk with your adviser and come up with a plan to take advantage of a market rebound. By keeping a long term view, you can avoid worrying about every up and down tick in the market. No one can control market ups or downs, but we can control our emotions and how we take advantage of this investment opportunity. *Regular investing does not guarantee profit or protect against market loss.Shawn Weatherred can be reached at Creative Investment Concepts, Inc. in Eagle 970-331-3086. Securities offered through Cadaret, Grant, & Co., Inc. Creative Investment Concepts, Inc. and Cadaret, Grant & Co., Inc. are separate entities. If you have a question or a topic you would like him to write about e-mail sweatherred@ae.cadaretgrant.com.


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