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Learn what it takes to have a successful investment portfolio.  Let me know what you think in the comments below.

Basics of Investment Management


There is a principle in behavioral finance called a recency bias. This is where you believe that what has happened in the past 30 to 60 days will become the new normal.

If you’ve paid attention to the investment world over the past thirty or forty years you would have seen that what has happened over the recent past doesn’t mean anything.

HI, I’m Josh Patrick a founding principle here at Stage 2 Planning Partners.

Let’s take a look at what this means for you.

The market does go up and down.

I know this looks like a really stupid statement. At the same time it’s the truth. Markets do go up and they go down. The key is what do you do when the market either skyrockets or sinks like a brick?

I’m hoping that you don’t get too excited when the market goes up and I really hope that you don’t get scared and pull your money out of the market when it crashes.

What I’ve learned over the past forty years is that getting excited about my investments is a big mistake. Instead I want to stay the course, how about you?

When the market is hot I enjoy it but I don’t change my behavior. When the market crashes I want you to try to say, “My isn’t that interesting?” If you can do that, then you’ll be invested when the market turns around and over the past forty years it has always turned around.

You’re not been able to time the market and neither am I.

When I was younger I thought I could time the market and beat it. The truth is I managed to time it once and save a bunch of money. But, and this is a big but every other time I’ve tried to time the market I’ve been a big loser and the chances are if you’ve tried you’ve had the same experience as I.

I don’t want you to be a big loser; I want you to stay invested with an asset allocation of stocks, bonds and cash that makes sense for you. Don’t try to outsmart the market, just stay the course.

Staying in the market is the best bet.

If you follow market movements you’ll see that most of the movements in a bull market happen over a few days. If you’re trying to figure out whether to be in the market or not you’re likely going to miss those days.

You’re much better off just staying the course and letting the market do it’s thing over the long term.

Make sure you think about your investments as buckets.

Here’s the key to a successful investing program. If you need your money in the next five years you shouldn’t have very much if any in stocks.

The key with being able to stay the course is to put your money in separate accounts. You might decide you need to spend 10% of your money over the next three years. That money should stay in cash.

You might also have a need of another 10% of your money from 3- to 6 years from now. This need for money could be a good place for bonds. Finally, the rest of your money isn’t needed for 6 years or more. This money could be in stocks. That way if the market does crash, you will have time for your account to recover.

This is how we do asset allocation. We help you think about your money and the time frame you need it. Using a bucket system tied to when you need your money allows you to stay the course. In my opinion that’s what it’s all about.

What my real job is.

Choosing what investments you decide to use is important. I believe a more important job is for me to help you design your buckets and then stay the course.

I don’t want you to get too excited when the market is hot and I really don’t want you to get scared when the market drops. That’s why we choose time frames that give you the best chance of reaching your investment goals.

Doesn’t that sound like an idea you can get behind? Investing really isn’t very complicated but it does force us to pay attention to things that happened years ago. That’s what successful investors do and I bet you want to be part of that group.

Thanks for taking the time to visit us today.  Again, I’m Josh Patrick you’re at Stage 2 Planning Partners and I hope to see you back really soon.

BTW, if you’re interested and I hope you are – we have a special report on the basics of investing.  If you’re interested in getting this, just click on the button below and we’ll get this report on its way to you.

Topics: financial planning, Investments, Investment video

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