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Investment Mantras

A year ago, I attended The Copper Ball fundraiser, benefiting our community hospital. In addition to the cost of admission, there were opportunities to make additional contributions, mostly through silent auction bids and prize ticket purchases. While no one has ever accused me of being a gambler, I nonetheless purchased two raffle tickets. It was for charity after all. In exchange for these two tickets, I had the opportunity to choose two copper balls, each of which concealed a prize. The first ball I chose worked out well; two lower level field tickets to the 2017 Cactus Bowl. WINNER! Then, I got to choose my second ball, which upon opening, I learned was one of the two Grand Prizes. "Oohs" and "Aahs" from bystanders. What could it be? A private seminar for two, taught by a world-famous instructor of…meditation. Grand Prize? It felt more like a joke. LOSER!

As the year passed, I found myself drawn to meditation (like bowling proprietors seeing bowling played in every TV commercial). I couldn't help noticing reviews of countless new books studying the practice. Even The Wall Street Journal was espousing the benefits of meditation. In a series of articles, the newspaper claimed that meditation could give me clarity and help me perform at a higher level. It could even make me more compassionate. Who couldn't stand to be more compassionate?

And, according to these publications, not only are there benefits to meditation, there are dozens of forms of meditation to choose from. Who knew for example, that one can meditate while walking? Or that focusing on one's breath can quiet the mind. I was particularly drawn to Transcendental Meditation, the practice of focusing on words and sounds as a means towards quieting the mind. This practice customizes those words and sounds into a "mantra" specific to each individual. This got me thinking (no pun intended); that an inexperienced investor could similarly improve their investment outcomes by repeating specific investment practices. Here are a few of my favorite "investment mantras." For maximum effect, repeat them over and over.

Buy low, sell high Warren Buffet is famous for shopping the sale rack of the department stores before heading over to look at the full-priced goods. The investment equivalent of that practice is buying assets that are out-of-favor versus those that your friends and colleagues are recommending (like cyber-currency). If you do that consistently, your next job is to hold on. But don't be greedy. Set a profit target upfront and reassess that target price as it is approached. Remember, profit is a realized gain only when it is in your bank.


Investopedia describes diversification as "a risk management technique that mixes a wide variety of investments within a portfolio." By assembling a broad group of assets, you reduce the chance of portfolio losses while potentially achieving higher than expected returns. We call this a "free lunch," one of the few we know of as investors. Others refer to it as not putting all your eggs in one basket. The result? Less bad news and more good news simply because you hold different investments. With that comes potentially higher average returns.

Time in the market, not market timing

The longer you invest in the market, the more you will potentially earn. Only over time are patience and inaction generally rewarded. Unfortunately, individuals aren't geared to wait for results. Most investors feel they need to "do something" to achieve superior outcomes. That's a real risk when market returns are often concentrated and achieved over short periods of time. Missing a few days or weeks of positive returns because of impatience can set an investor back substantially. Putnam Investments quantified that potential over a 15-year period ending in 2016. They found that missing the 10 best days cut investment returns by almost one half ( Ignore short-term fluctuations in price, and bear the course. If that's too hard to do yourself, consider hiring an advisor.

Fees compound, too

Most people understand the power of compounding, but look at it from only one side – the bright side. Keeping your money invested at compounding interest rates leads to accelerated savings over time. It is why time in the market is so important to successful investing. But investment fees will compound over time, too, negatively impacting portfolio returns. These fees come in a variety of opaque packages, including advisory fees, trading commissions, and management fees. You need to know what those are, where they lurk, and who is receiving them. Then minimize them so that more of your money is working for you.

Passive, not active

Some investors will choose an advisor who constructs their portfolio with a collection of the advisor's best stock and bond ideas. While these very smart managers set out to do better than average, two things get in their way – fees and forecasting.

The costs of making money often outweigh any incremental returns. In Warren Buffet's 2005 annual letter, he argued that even a group of professional managers who buy their best investment ideas could not beat a group of amateur investors who put their money in an unmanaged, low-cost index fund. Instead of buying individual stocks or bonds (active investing), passive investing in low-cost index funds can keep costs down and lead to potentially better long-term performance.

Aggravating that issue is the reality that most experts don't really know what the future will bear. With index investing, the human is taken out of the equation and the results are often superior.

Research on the benefits of meditation are also quantifiable. It is not IF one will benefit from practicing, but HOW MUCH one will benefit. The same is true when following the best practices of investing. Academic studies prove it. Your returns over time will be higher the more you follow these practices. I say this to you after making years of investment mistakes myself, and humbly learning from them. On my four-month anniversary of a twice-a-day meditation practice, I am happy to report that all the benefits they attribute to this commitment are coming true. I just hope you can find that winning copper ball to experience it for yourself. Namaste, and all the best in your investing.

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At WT Wealth Management we strongly suggest having a personal financial plan in place before making any investment decisions including understanding your personal risk tolerance and having clearly outlined investment objectives.

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