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September 12, 2005

Achieving Investment Success

In this month's Financial Advisor magazine, Nick Murray, looks at what makes the difference between a mediocre advisor and an excellent one. I believe in advising oneself but some of his thoughts are applicable. All investors should understand the core message here which is that it is your actions over time that will ultimately determine how successful you are as an investor.

 

Huh! We are back to the idea of making good choices again. Imagine that!

 

Anyway, unfortunately, for whatever reason, this is the one article not listed in the online version of the magazine, so I can't give you a link to the article, only to the source. I will reproduce some of the thoughts I agree with here:

 

Excellence is always acting; mediocrity is always reacting.

 

Excellence empathizes; mediocrity argues. Mediocrity, for example, is always trying to argue either that the market will not go down or that it will quickly come back., but that in either event you don't need to be afraid of it. (Then along comes an outlying event like 9/11, and the advisor can do nothing but help the terrified client capitulate, since his arguments are seen to be have been so patently false.) Excellence says, "We all fear, from time to time. Indeed there are times, like 9/11 - when you wouldn't be human if you were not afraid, and I can only empathize with you. The critically important thing is to be able to feel fear and not act on it."

 

Mediocrity manages portfolios; excellence manages people. The largest single determinant of the return which an investor gets over a real lifetime of investing is his own behavior, so the wise advisor makes behavior modification - preventing people from blowing themselves up - a he part of his value proposition. Mediocrity responds to investor irrationality by striving even harder to control the variable above all variables that cannot be controlled: relative performance. Excellence knows that the only way meaningfully to enhance investor returns is by leading her clients away from destructive behaviors - and by insisting her good advice be followed. Excellence never continues trying to give good advice to people who have previously rejected it.

 

SOURCE:

 

1. Nick Murray, "Excellence Is As Excellence Does: It's about doing good things better and better." Financial Advisor September 2005; pp 43, 44

 

 

Kim Snider, Kim Snider Financial Communications, Chronim Investments and/or Snider Advisors make no representation that the information and opinions expressed are accurate, complete or current. The opinions expressed should not be construed as financial, legal, tax, or other advice and are provided for informational purposes only. Call 866-952-0100 to request the Snider Investment Method™ Owner's Manual, which includes a description of the Snider Investment Method, investment objectives, risks, suitability and other information. Please read and consider carefully before investing. All investments are subject to risk including possible loss of principal.

Posted by Kim Snider on September 12, 2005 | Permalink

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