Investing Character Test: Financial Advisors' Daily Digest
By SA For FAs :
The choices we make as investors determine our investment results, but do they have farther-reaching implications? The question occurred to me in reading Rob Marstrand's latest article contrasting the investing tortoise and the trading hare . He recommends that investors take the former rather than the latter approach, and he created a nifty chart outlining 10 fundamental differences between them.
For example, the trading personality is impatient, whereas the investor personality is impatient; the trader has to be a news junkie, whereas the investor's focus is fundamentals; the trader must spend a lot of time on his activity, the investor very little time; the trader has high stress, assumes high risk and pays high fees, whereas the investor enjoys low stress, low risk and low fees. I couldn't help but think that on every count, I would want my future son-in-law to be an investor and not a trader.
In other words, the two methodologies seemed to carry character implications as well. Mind you, I mean no gratuitous insult to those whose job requires them to be more actively involved in markets, and (importantly) who love their jobs. I know many such people, and so far as I know, their fathers-in-law are happy to have them in the family. What's more, tests - including challenging market environments - build character. But a person experiences plenty of tests in life and doesn't always withstand them. Thus introducing the level of stress and financial failure that trading hurls at especially non-professional traders is not something I would volunteer to welcome into my household.
Indeed, I found it interesting and informative that Jeff Miller's latest Stock Exchange specifically warns non-professionals against the steep learning curve they would face in taking this approach. In other words, they'd be competing against him and his computer algorithms - not a good move!
Please share your thoughts on this issue in our comments section. Meanwhile, below please find links to other advisor-related content on today's Seeking Alpha. Also, Seeking Alpha has added podcasts to its repertoire - from me and others; for a weekly "best of" digest, follow SA Multimedia ; you can also follow my feed on iTunes .
- Eric Basmajian: Debt across nearly every category of consumer loans has reached record levels .
- Lance Roberts: Growth of U.S. debt diverts resources away from productive investment.
- Russell Investments: Markets tumble as Trump announces tariffs on China .
- For more content geared to FAs, visit the Financial Advisor Center .
See also The Theory Of Everything - Today's Editors' Picks on seekingalpha.com