Rule #1 - 10 Rules for Being a Successful Investor

Many years ago, we developed these rules to help our new clients learn the behavior that we believe gives them the best chance of success given the way we invest. Call it behavioral coaching, education on markets, or just plain old “rules to be our client”. We found that when we set expectations up front appropriately, clients better understood our approach and more importantly, why we were doing what we did. So this is the first in a series of short blog pieces on each rule.

Rule #1
Stop watching financial news networks and reading financial magazines about investing. CNBC and Fox Business are in the business of delivering up to the moment news on investing and publicly held company developments. Our very broadly diversified buy & hold approach to investing doesn’t focus on the latest corporate news or the most recent data coming out of the Fed or Congress (except for tax policy). We won’t sell based on news events but periodically rebalance accounts to maintain a certain risk profile. So reacting to talking heads on TV over the latest news is anathema to our beliefs on investing. Therefore, we pay absolutely no attention to these outlets.

Now there are certain topics that a financial magazine might cover that we find helpful for clients. They don’t relate to investment strategy but more on financial planning, which is fine. As a believer that financial markets are largely efficient, we feel that all the time, energy, and money spent trying to outsmart markets leads to no advantage and in fact, leads to systematic underperformance. The evidence for this position is extensive and overwhelming.

In a nutshell, the financial media is noise and a distraction for the long term prudent investor. Focus on what you control: costs, taxes, and risk – and not on what’s out of your control: returns. Spend time on planning for your future and allow the capital markets to work for you.


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