You Can’t Drive If You Only Look in the Rear View Mirror

by Marilou Moursund on March 31, 2009

in Investment Strategies

With the market down almost 50% from its highs, I frequently hear people, including some clients, say that they are afraid to open their statements.

We encourage our clients to open their statements and come in to review their holdings. Asset allocation is the key driver of performance over the long term, and it should be reviewed at least annually and whenever there has been a large move in the market. There may not be any action that needs to be taken immediately, but you need to know where you are in order to make good decisions.

This bear market has been extremely painful, and the shift from a credit bubble driven economy to an economy that has a more rational approach to capital allocation will bring different opportunities. It is a common behavioral trait to look back at your most recent experience and extrapolate it forward, and as an investor I have to make sure that I don’t fall into this trap.

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