Caveat Emptor
Be careful when seeking advice even from the professionals who are supposed to know more than the ordinary people. Just ask any sales and marketing professionals out there who know the value of repeating the message in their work. They know that with enough time they will eventually crack through their audience’s cortex and implant themselves there for good.
They will repeatedly tell their audience something
like you must buy and hold stocks forever, you must remain invested all the
time, get into a system and lock-up your money for 15 or 20 years before you
could withdraw your capital, bonds are safe, stuff your portfolio with as many mutual
funds as possible for the best diversified returns, etc. Claptrap. However, be prepared
in glossy, colorful brochures and repeated often enough, the people on the
street will believe them.
In the real world, even if some of that
stuff might have worked 10 years ago, the financial world has changed and the rules
of the game have changed. The harsh reality is that failing to account for
where the market today could leave you waiting for decades before you recover
your capital. You must always consider where you are and where the market is
currently situated. You must make all your investment decisions
accordingly.
While having my coffee at Starbucks at a
crowded mall, I spotted a group of teenage students most likely from a nearby
international school. It was impossible for me to figure out their nationality
especially the girls. They mixed with each others freely enjoying their local
meals. The older teacher with a big belly was probably an American. The point
is it is a big world out there and there are new opportunities waiting to be
discovered every day.
Some of my clients, depending on their
financial situations will need to make 8%, 10% or 15% compounded returns annually
to achieve their long-term financial objectives (from paying college bills to
retirement). Sensible asset allocation has evolved beyond domestic stocks, bonds
and cash to include offshore diversification across other asset classes. I have
grown tired of the demonization of alternative investment funds despite their
impressive risk-adjusted performance.
“How do we find really good investment
opportunities as well as managers?” You have to think outside of the box a
little bit and find your own path – though as you are doing so, stay
disciplined and be careful not to get too emotional about the short-term
numbers. You also see opportunities could come simply in taking more of an
opportunistic and multi-channel approach – something I have always focused on
to a great extent in my work.