What should an investor be most focused on in their current financial decision making? Earlier last week, I promised you my notes from a financial expert panel discussion held during the Money Smart Week Preview Party 2011 at the Chicago Board Options Exchange.
They panel was chocked full of "intellectual-financial-martial-arts" from these experts surrounding the theme of "Financial Focus 2011: What's on the Shortlist":
- Jack Ablin - Chief Investment Officer, Harris Private Bank
- David Herro - Chief Investment Officer at Harris Associates
- Gail Marks Jarvis - Financial Columnist, Chicago Tribune
- Jon Najarian - TradeMONSTER.com, CNBC TV Contributor
Here are my notes from their comments as it boiled around to addressing these two main points:
- Making a plan
DISCLAIMER: These notes should not be misunderstood as financial planning or investment advice
and should serve only as discussion points with your financial
- Why are we feeling so badly when the markets are doing well? Hello, the markets are showing very positive signs!
- What should people think about this "risk"? People didn't know risk before the recession! We thought stocks go up 10% each year and not knowing that it was an average. Before Japan disaster, people were JUST starting to put money in stocks n mutual funds....now it's a black swan!
- Get acclimated to volatility! Get used to ups and downs of the economy and proper asset allocation in tough times!!
- Not what your stress test is in tough times!
- Why is it during 10 years you made nothing! But if you've invested since Oct 2008 up til now you would have made 300%! (Not sure what specific investment or index the panel was referring to, worthwhile to have this discussion with your advisor)
- Markets influenced by public policy...war creates the market to go sideways versus up and down
- Current market will go sideways until 2015
- Managing risk unless you have a 20 yr time horizon is the primary concern!!
- Investing is...a psychological thing...would you buy apple if it was down $50 a share?
- The reason why people sell out is cause they don't have a plan!! If you don't have a plan, you easily fall prey to fear and lack of confidence causing poor financial decisions.
- Target date funds - for those don't know how to invest (poll says that less than 2-3% knew how to invest) Gail Marks Jarvis talks about target date funds lost 30% at a time when people needed this for their retirement. Because target date funds don't tell you what us in them!!
- Don't be out in dummy funds and be told "Trust us!" Don't trust in words, trust in numbers!!!
- Our workforce must be educated (overtime) we have to "paper-over" balance with inflation
- Can u spend a half hour to an hour a week to learn about personal finances?
- With education, you'll stick to your convictions (or not)!
- One of the reasons why people sell at the wrong time is because they think "other people" know better!
- Insurance for traders - they buy "put protection"
- (As someone yells from the crowd) What do you do About China? (Panel replies) Ignore them...
- Take a growth preservation attitude. With most wealthy people if their net worth doubled, their lifestyle would not change. HOWEVER, if it was cut in half, it would change!!
- How do we add over 266k jobs, unemployment down to 8.8% and yet consumer confidence is down? Gas prices are holding us back...the same forces that drive up energy costs are the same forces that can drive it down.
- They say buy low sell high buy we never do it! -Gail Marks Jarvis
- How many millionaires you know invest in savings accounts?? <---GOOD POINT!
While taking a tour through open outcry pit on the floor of the Chicago Board Options Exchange, here's some banter I took notes from a trader walking us around:
- Money you invest in the stock market it better be money you can burn!!!!
- If you wanna be a trader, go one year in the business and hope you break even. If you can, you'll be successful in the future!!
Stay tuned to a vlog from a panel I hosted at Columbia College highlighting "Entreprenuers in the Arts" who are balancing what they love, the tough economy and how they pay the bills!
Tags: Asset Allocation, David Herro, Financial Columnist, Financial Decisionmaking, financial expert, Gail Marks Jarvis, Gas Prices, Harris Associates, Jack Ablin, Jon Majarian, Oakmark, Savings Account, Stock Market, TradeMonster.com