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Improving Investor Behavior: Managing Your Fears

Note

This article is set to appear in the Denver Post in about one week. We felt it was worthwhile to share with our clients now, given the events of the past few days.

Shark Week is among the longest running and most popular cable programs in history. First appearing 30 years ago in 1988, the show has since been watched and celebrated by millions. Why would a program about sharks and their danger be so popular? I think it plays on the emotion of fear, and more interestingly, people’s desire to be a little bit scared.

This is quite the paradox: some people enjoy engaging in an activity designed to make them uncomfortable. The same can be said for horror movies, especially at this time of year. In both circumstances, however, the fear is often wholly unfounded. Sharks are responsible for about six deaths per year, and I highly doubt zombies will be taking over the world anytime soon. Instead, people should be much more afraid of mosquitos with their death toll last year of more than 830,000 people.

My point is this: sometimes our greatest fears are the most unfounded. Whether it’s an oversized fish or monsters under the bed, our worst fears take up an oversized portion of our conscious and drive actions that can be damaging and counterproductive. Fear is a powerful emotion and one you must learn to rein in if you want to be a successful investor.

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Steve Booren

Steve Booren

Steve started his investment career in 1978 with the NYSE investment firm EF Hutton, working in the environment of a large investment company. Desiring to provide clients with objective investment advice, he founded Prosperion Financial Advisors. Learn more about Steve here.

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Anxiety and Investing: Taking the Fear Out of Finances

The chances that either you, a loved one, or a friend have had an incident with, or an ongoing relationship with heightened anxiety are likely. Almost 20 percent of the population expresses some sort of anxiety disorder in a lifetime. It comes from a combination of genes and impactful experiences throughout life. Whether relatively mild, or the cause of full on panic attacks for the victim, it is a disruptive force.

Fear and worry can be associated with any number of events or circumstances, but I’ve found that finance can be a leading cause. This post is written for anyone who has anxiety around their money, or for those with a loved one who might. In either situation, it’s important to understand how to take the “fear out of finances.” In this three part series we’ll talk about how to Process, Plan, and Pursue more comfort and confidence in personal finances and investing, hopefully leading to decreased anxiety for those affected by this part of life.

As you get to know our “characters” by their “style of attachment” (the basis for how we think about and interact with our financial lives), I’ve written the characters to represent the extremes. You, or your peer / loved one, may not feel as strongly one way or the other as the examples, but you may find more similarities to one character than another. Wherever one finds themselves in the spectrum, they are not alone, and these processes can be put into practice for a confident future with your finances.

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An Open Letter to Employers

There is a national debate right now on how to make 401k plans more effective for retirement plan participants. The question isn’t “how do we supply the workforce with access to retirement savings vehicles?”, but rather “Why are so few employees taking advantage of these important benefit offerings?” In the end, it’s about a lack of familiarity and trust.

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The 8th Wonder of the World – Compounding Interest

I would like to take a look at the concepts of compounding and inflation. The principles of the two are identical. One works for you in a positive growing way, the other in a silent negative manner.

Let’s take a look at inflation first.

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Dave Anderson

Dave Anderson

As an advisor, Dave Anderson places a high priority on developing strong personal relationships with his clients. Frequent communication is important so that he works from an informed and timely view of his clients personal and life goals, financial objectives, priorities and risk tolerance. Learn more about Dave here.

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Patience Isn’t a Virtue, It’s a Necessity

With the increased fluctuations and heightened volatility we have experienced in the markets in the past several months, I would like to share my thoughts and perspective.

I feel the most important point I would like to state is: short-term volatility is normal. We will look at some statistics shortly, but first I desire to express that volatility is to be expected. We do not let volatility sway our opinion of the investments we own.

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Dave Anderson

Dave Anderson

As an advisor, Dave Anderson places a high priority on developing strong personal relationships with his clients. Frequent communication is important so that he works from an informed and timely view of his clients personal and life goals, financial objectives, priorities and risk tolerance. Learn more about Dave here.

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Invest in Businesses Rather than Renting Stocks

Most business owners can feel the pulse of their business. If you own a coffee shop for instance, you can go to the location, see and interact with your employees, touch your inventory, and keep your customers happily caffeinated. You can smell the aroma of your business. You can feel it.

What if you had that same feeling as a shareholder of a public company? What if you thought like an owner? Consider one that sells coffee. Yesterday, you did not own any shares of this company, but today you are an owner – a shareholder.  The feeling of being an owner of that company is divorced from owning a percentage or shares in a public company. Some may think those shares represent a lotto ticket that goes up and down every business day on some stock exchange, based on public consensus or what some analyst says or does not say about that company’s future prospects. Some almost consider it like a casino.

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Steve Booren

Steve Booren

Steve started his investment career in 1978 with the NYSE investment firm EF Hutton, working in the environment of a large investment company. Desiring to provide clients with objective investment advice, he founded Prosperion Financial Advisors. Learn more about Steve here.

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Renegotiating with our Business Partner, Donald Trump

Imagine you have a business relationship with a partner. You work and run the business, and take home 65 percent of the profits for your efforts and your partner received 35%. Last December your partner recognized your hard work and rewarded you with an additional 14 percent of the business, reducing their take to 21 percent. Suddenly you are receiving a much larger portion of the profits.

At the same time your business partner has made an effort to reduce friction in the business and keep borrowing costs low. These are ideal conditions for your business to grow, and they are exactly what the U.S. Government has done.

In short, the tax cuts passed by Congress late last year are a big deal. Corporations are getting around 20 percent more tax relief and reflecting that relief in well-publicized bonuses to workers, increases in earnings, and growing dividend payments to the shareholders. All of that is not just good – but incredibly good for the American economy and citizens.

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Steve Booren

Steve Booren

Steve started his investment career in 1978 with the NYSE investment firm EF Hutton, working in the environment of a large investment company. Desiring to provide clients with objective investment advice, he founded Prosperion Financial Advisors. Learn more about Steve here.

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The Difference Between Financial and Investment Advice

There’s never been a better time to be an investor. Advances in technology have leveled the playing field in a truly unprecedented way. While these advances are great for you, they make offering value as financial advisors more difficult.

So as we continue to see improvements in technology I believe investment management will become more and more of a commodity. That means real financial advice will be a huge differentiator in the financial services industry. Anyone can create a portfolio, asset allocation or investment strategy. We are even told robots can do this with this concept called “Robo-Advisor”. What most people actually need is advice about how their investments fit into their overall financial plan, and more importantly their life. Believe me – robots cannot do this, nor do investment products do this. It takes an experienced, skilled, listening Advisor.

Both investment management and financial advice are necessary components for long-term success, but it’s important to understand the differences.

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Steve Booren

Steve Booren

Steve started his investment career in 1978 with the NYSE investment firm EF Hutton, working in the environment of a large investment company. Desiring to provide clients with objective investment advice, he founded Prosperion Financial Advisors. Learn more about Steve here.

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Meet Bob, The World’s Worst Market Timer

Did you invest some money on Jan. 26th? Do you ever feel “the curse” of investing at exactly the wrong point? Like your investing is too late, at the wrong time, or maybe that you’re just unlucky?

Well meet Bob – the World’s Worst Market Timer. Bob began his working career in 1970 at age 22 and was a diligent saver and planner.

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Steve Booren

Steve Booren

Steve started his investment career in 1978 with the NYSE investment firm EF Hutton, working in the environment of a large investment company. Desiring to provide clients with objective investment advice, he founded Prosperion Financial Advisors. Learn more about Steve here.

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The U.S. Economy & Markets

I am an optimist by nature. I feel this optimism is not pie-in-the-sky wishful thinking, but rather a view to the future that is based on a sound historical tract record and the economic progress we see across the globe. This optimism springs from characteristics that aren’t uniquely American, but we certainly are blessed by a population that exhibits many of these attributes:

  • Hard work
  • Ingenuity and creativity
  • Kean intellect
  • An entrepreneurial spirit
  • Productivity, efficiency, and a striving for improvement
  • Cutting edge mentality
  • Yet fun, fruitful, and an ever growing vision of what the future might hold

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Dave Anderson

Dave Anderson

As an advisor, Dave Anderson places a high priority on developing strong personal relationships with his clients. Frequent communication is important so that he works from an informed and timely view of his clients personal and life goals, financial objectives, priorities and risk tolerance. Learn more about Dave here.

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