Investing Character Test: Financial Advisors' Daily Digest

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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!

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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