Select Page

The truism for all diversified investors is that they are not really diversified if they don’t hate something in their portfolio at the moment.” – Barry Ritholtz

I absolutely love this quote written by Barry Ritholtz, a Bloomberg View columnist and founder of Ritholtz Wealth Management. The more time I spend working in helping clients create and design financial plans, the more I see how true this statement is.

Our human nature is to avoid anything that causes us pain. This is a basic survival instinct that we all possess. It is normal to associate feelings of pain when any of us see an investment at a lower value than the previous month, quarter, or year. It is painful! Sometimes it is downright ugly! If we are diversified investors, there is always going to be a part of our portfolio that is “down” while other parts are “up.” This is a fact we must accept. One year it will look foolish to own bonds, the next year foolish to own US stocks, the next year foolish to own gold, the next year foolish to own international stocks, the next year foolish to own real estate… Diversification shows us that we want to own all the aforementioned assets over the long term.

The blessing and the curse of technology is that all of us can get up to the minute values of all investments on our phones, tablets, or computers 24 hours a day. At the very least, we have the ability to check values every day. Imagine if every morning you received a knock on your front door and an individual told you to the $.01 what your house was worth on that exact day. How silly would that be? Imagine the thousands of variables that could factor into why the number you hear is higher or lower than the day prior. Unless you were selling your home, why would you even want this individual to interrupt your breakfast? What difference would it make? Your IRAs, 401ks, 403bs, TSPs, and other investments are no different.

Market predictions are usually not worth much, but here is a prediction I can say with 100% certainty for diversified investors. 12 months ago there was a part of your portfolio you hated, today there is a part you hate, and 12 months from now there will be a different part you hate. As long as you have crafted a diversified investment plan designed to meet your goals, there is no reason to let the psychological pain of that investment you currently hate to cause you to make decisions you will later regret.
Callan 2014 chart-20yrCallan 2014 disclosure
* * * * *
As a Family Wealth Advisor, Joe assists business owners, executives, and affluent families in the areas of estate planning, business succession planning, and wealth management. Joe takes pride in identifying a variety of planning options and opportunities followed by clear guidance to be sure his clients make the best possible decisions for their business and family. Through speaking engagements, Joe has addressed multiple trade associations to include the Restaurant Association of Maryland (RAM) and the National Automobile Dealers Association (NADA) Academy.

Joe holds the CERTIFIED FINANCIAL PLANNER™ (CFP®) designation and is a Chartered Retirement Planning Counselor (CRPC®). He is a member of the Financial Planning Association (FPA) and Financial Services Institute (FSI). While earning his bachelor degree at Washington College, he was awarded the Department of Business Management Award given to a graduate who shows outstanding qualities of scholarship, character, and leadership. Joe holds his Series 7, 66, and Life and Health Insurance license. He has also been recognized for a second year as a Five Star Wealth Manager,as featured in Baltimore Magazine.