As the summer gets hotter here in Florida, a few things happen: one, the mercury rises to about 120 degrees, families go on vacations, and the stock market generally takes a siesta.
Typically, the summer months are not as healthy in terms of investment returns. Why this is so is anyone’s guess. However, what is the investor supposed to do? Perhaps we can draw some wisdom from the successful investors of the past.
Benjamin Graham is widely recognized as the inventor of two basic investment disciplines, security analysis and value investing. In 1949 he published the famous book The Intelligent Investor; this has guided many highly successful investors over time. “The investor’s chief problem and even his worst enemy, is likely to be himself.” How true this is. We know, for instance, that we should buy low and sell high, but this doesn’t always occur due to human emotion and poor timing. He also said, “The individual investor should act consistently as an investor and not as a speculator.” You can’t predict the future, but instead you should base your decision on facts.
Peter Lynch, who successfully ran the largest mutual fund in the world, Fidelity Magellan, said, “Know what you own and know why you own it.” Always do your research and periodically evaluate your portfolio moldings.
A current financial guru, Dave Ramsay, was quoted saying, “Financial peace isn’t the acquisition of stuff, it’s learning to live on less than you make, so you can give money back and have money to invest. You can’t win till you do this.” If more of us practiced this principle, then we would not have credit cards, debt problems, bankruptcies, foreclosures, and other financial overextensions.
Robert G. Allen was quoted as saying, “How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.” Although this statement was made many years ago, it’s especially pertinent to today’s low interest environment. The extremely low interest rate that savings, money markets, and CDs are yielding does not keep up with inflation. Your spending power is quickly eroded over the years.
Warren Buffet is considered to be one of the most successful investors of all time. He is the second richest man in the United States and has successfully run his company “Berkshire Hathaway” for many years. He said, “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.” Never chase the pack of the hot stock/ mutual fund of the day. Buffet is also a proponent of buying what he knows and understands. “Never invest in a business you can’t understand.” Also, “I never attempt to make money on the stock market, I buy on the assumptions they could close the market the next day and not reopen it for five years.” Another of his quotes says, “It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you will drift in that direction.” Warren Buffet is a believer in having wise advisors to help him make his decisions.
One of my favorite quotes concerning investing and any decision in life is from Benjamin Franklin. “An investment in knowledge pays the best interest.” Franklin reminded us to do our homework and analysis or have a trusted advisor help you.
So as the summer heats up and we tend to travel, remember to keep your focus on your goals for your financial life. If you have any questions or would like a free, no obligation consultation regarding your financial situation, please call James Pitts at (727) 686-4068. Thanks and happy investing!
Securities offered through J.W. Cole Financial, Inc. (JWC) Member FINRA/SIPC. Advisory services offered through Jonathan Roberts Advisory Group, Inc. (JRAG). The opinions expressed are those of James Pitts and based on information believed to be reliable but not guaranteed and subject to change and do not necessarily reflect the position of JWC/JRAG. Past performance is no indication of future results.
Dr. James Pitts is a Registered Investment Advisor Representative and Financial Planner. He ran a successful dental practice for 25 years and by using financial planning techniques and investing wisely, he was able to retire at 51 financially independent and debt free. His passion is to help other people reach their financial goals and live the best life.
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Dr. James R. Pitts