Dollars and Sen$e: Preparing for the next BIG….


Investment Consultant, Gary Goldberg Financial Services

Rally? Correction? Geopolitical crisis? That’s the issue with prognosticators and commentators. They make a very convincing argument to protect yourself from, or prepare for the next… the next what? It’s the “what” that they all struggle with.

For investors, this poses a very particular challenge, as so called experts forecast what might happen next, and many investors get caught up in the hype and make portfolio moves that end up hurting them, either by selling investments as markets continue to rise, or never getting back in after having sold with some good luck and timing on their side. Last month I wrote about the psychology of investing, and how easily we are all influenced by what we hear.

As I thought back about that article, I couldn’t help but think of the famed investment guru Peter Lynch. Mr. Lynch ran the Fidelity Magellan Fund, the world’s largest at the time, and amassed an impressive 11%+ annual return over his 20 year tenure – beating the S&P 500 and just about all of his peers. Yet, according to Mr. Lynch’s own calculations – as he details in his book “One Up on Wall Street,” the average investor in the Magellan Fund earned a meager 4 percent annual return. Why? Because of emotions.

Investors would listen to Wall Street gurus on CNBC or in the WSJ and determine that they could outsmart the market and market-time. Well, we all know how that worked out. Since that time, Fidelity, and many others, have conducted many more studies regarding investor performance and psychology. One set of common conclusions is that investors themselves are their own worst enemies, just as Peter Lynch described.

Moreover, it was shown that investors who work with a financial professional, an advisor, tend to reach their investment goals much more frequently than investors who try to go it alone. Since I don’t have the details of this study, I can’t tell you if it’s because investors who hire professionals outperform DIY’s or if it’s because they have more realistic goals.

Naturally, as an investment advisor, I’m biased and believe that the quality of advice my firm and I provide has a profound impact on our client’s financial wellbeing. But you have to judge that for yourself – I challenge you to ask yourself these 2 questions: 1) Are you likely to be swayed into an investment decision because of hyperbole in the press 2) Was your last investment mistake due to an emotional reaction – if you answered yes to either, working with an investment advisor may benefit you greatly.

Christopher Hanly is an investment consultant with Gary Goldberg Financial Services in Suffern and can be reached at (845) 368-2900 ext. 247 or



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