Behavioral Finance

One of our greatest responsibilities to our clients is to prevent them from making behavioral investment mistakes that can cause severe market underperformance and a failure to meet their financial goals.  

There have been numerous studies over time showing that investors are prone to making mistakes that can be costly over time. Below are three of the common behavioral mistakes we diligently work to prevent. 



Attempting To Time The Market

Basing your investment decisions on what you think the market is going to do in the future.  

When you attempt to time the market, you must correctly guess both your buy and sell trades in order to perform better than had you just stayed fully invested.  Unfortunately, the emotions of fear and greed act powerfully to prevent us from successfully timing the market.  The vast majority of investors lose money or underperform the market when they attempt to time their investment decisions.  Despite popular belief, market timing is extremely difficult to do consistently through time.  Speculating and attempting to time the market is risky and not recommended. 

"You must never delude yourself into thinking that you're investing when you're speculating."

- Benjamin Graham -


Chasing Returns

Investing Your Money In What Has Done Well Recently

Our propensity to chase returns is one of the primary reasons why investors buy high and sell low.  When an investment performs above its historical return, the odds increase that it could soon enter a period of underperformance.  We believe, and history shows, that investors are better off sticking to a disciplined investment strategy by staying broadly diversified and consistently rebalancing their portfolios through time (i.e., selling some of what has been doing well and buying some of what has not been doing well). 



Not Having The Appropriate Mix of Stocks and/or Bonds In Your Portfolio

One of the most common mistakes we see when starting to work with someone is the disconnect between their investment allocation and their financial goals and/or investment time horizon.  People have often misallocated their investments as a result of misinformation, fear, greed, or over confidence.  Their motivation and intentions are often good, but the outcome can be costly.  We have seen time and time again the dangers of misallocation and as a result, we spend a substantial amount time trying to help our clients to get and stay properly allocated through time.

“Individuals who cannot master their emotions are ill-suited to profit from the investment process. The investor’s chief problem—and even his worst enemy—is likely to be himself.”

- Benjamin Graham -

In addition to applying our disciplined investment strategy when investing our clients’ money, we also work tirelessly to help our clients avoid behavioral investment mistakes.  Our goal is to help improve your investment outcome and your investment experience by being educated and informed but not obsessed. 


Timely Communication

Time is of the essence.  Our clients are being bombarded with “information” from co-workers, friends, family, social media, news outlets, and more.  Typically, these sources are sharing material that increase anxiety, drive fear, and at times lead them to make emotional investment decisions.

We don’t want to be obnoxious and add to the noise, but we also need to be the voice of reason and help keep you grounded. We are there at times to just let you know that everything is going to be okay.

Regular Client Meetings

At a minimum, we want to meet with you twice a year in order to:   

1) Review your investment accounts and performance results to confirm if your investment allocation is still appropriate for your investment time horizon.  

2)  Confirm that current, or future expected account distribution rates are still sustainable.

3) Update your financial plan to determine if life events or changing financial goals warrant a change to your financial plan.

4) Ensure that account titling, beneficiary, and client profile information is current and up to date.

Financial Planning

There are numerous reasons why engaging in the financial planning process is valuable, but one of the greatest benefits is the perspective it provides.  Understanding the big picture can drastically improve investor behavior.  

You are your own benchmark.  As a result, the objective is not to outperform your neighbor or even beat the S&P 500.  The objective is to help you make sound financial decisions through time so that you  achieve your goals.