What a weekend for sports lovers – a Super Bowl that held our attention (even when the commercials weren’t on) and a female driver testing her skill on the NASCAR track.
For superstitious Super Bowl fans, be comforted in knowing that the stock market has a 79 percent likelihood of gaining ground in 2010. After all, the tea leaves tell us that when a team from the NFL (as compared to the old AFL) takes home the Lombardi Trophy, the markets should finish up. Just a note – since both teams qualify as NFL teams, only your game-betting profits (as opposed to investing profits) depended on the outcome.
NASCAR provided a good example of keeping your eye on the finish line. When Danica Patrick suffered a mid-race spinout, she had three choices:
— Stay in the infield, admitting defeat;
— Put the pedal to the metal in search of winning the race at all costs;
— Or (as she did), return to the track and execute the race-day strategy she knew would get her to the finish line in the best possible shape.
Over the past decade, investors have suffered numerous portfolio spinouts. And, their long-term success is and will be found in sticking to their race-day strategy.
Investing shouldn’t be a NASCAR race, whereby only the first one across the finish line wins. Investing is about finishing the race in a manner that avoids a turn-four crash when the finish line is in sight.
Can Danica Patrick teach you investment strategies? Why, yes she can.
Unfortunately, today, I see too many investors being wooed into thinking they have to finish first. They are being enticed to throw caution to the wind and to knowingly (and unknowingly) take extra risk. They ignore the game plan created with intellect and opt for a new plan, based on the emotion of making up lost ground.
So, whether your investing eye is caught by a seemingly higher interest rate for a bond fund, a long-term CD, or a “guaranteed” annuity, evaluate the risk. EVERY investment has some type of risk and investors need to understand what it is. (I’ll explore the different types of risk in next week’s column.)
Super Bowl winners have no effect on the investment markets (sorry), but smart NASCAR drivers can exemplify how to recover from a spinout, finish today’s race and race again tomorrow. When it comes to personal finance, it’s not about a fist-pumping victory (or crystal ball predictions). It’s about knowing you ran YOUR race and holding your head high as you cross the finish line.
D. DRUMMOND OSBORN, CFP, is a Certified Financial Planning practitioner and Director of Wealth Management at OSBORN Wealth Management, where he focuses on investment advice, financial planning and trust advisory services. Visit him on the web at www.osbornwealthmanagement, e-mail your questions to Drummond@osbornwealthmanagement.com, or follow his thoughts through his Wall on the OSBORN Wealth Management Facebook fan page.
