Chapter Two: Return

If risk management is where we dwell, most of the time, and tells “How the sausage is made” (not the most pleasant of subjects), we are keenly interested, too, in smartly growing your wealth, or at the very least making every effort to preserve your purchasing power. It’s human nature to seek a high return, and plainly more fun, but most of us feel the pain of loss twice as much as the pleasure of gain.

With this is mind, and three decades of experience, here are a handful of keys I’ve learned, and in my opinion, are critical to your success vs “Mr. Market.” Note: Prepare yourself to be uncomfortable from time to time even if this strikes a chord!

• Identify true value. Good (hopefully great) opportunities at attractive prices.
• Think differently. Your portfolio must look different from the market to beat the market. You will stand out.
• Avoid the herd / Be contrarian / Be unpopular. You won’t have much in common with “hot stock” chatter at the next cocktail party.
• Be patient and think long term; Wall Street rarely does. This is a huge advantage.
• To grow your wealth, concentrate holdings; to preserve your wealth, diversify.
• Be opportunistic. Be ready to pounce when it feels very uncomfortable to do so. Planning to do so ahead of time keeps emotions firmly in check.

Let’s take a breath. Now might be a good time to think about your narrative and if this approach is a good fit with your beliefs, your philosophy and your objectives. Better to determine now if our interests are aligned. The path is not easy, not guaranteed, but one where experience has shined the brightest light.

It must be written.

Any opinions are those of the financial advisor and not necessarily those of Raymond James. Investing involves risk and you may incur a profit or loss regardless of strategy selected.