Broker Check

Beyond Trade Wars and Trumpism

| August 24, 2018

I converse with clients and prospective clients all day, almost every day. It's what I do. It's how I learn, and how I provide service. It is not, however, how I build or manage portfolios.

For the better part of the past two years, I've listened to all the reasons that people have for fearing what they perceive to be the troubled mind and likely ensuing actions of President Trump. Sometimes I agree, sometimes not - but I'm always interested in what people are thinking. But again, that's not how I build or manage portfolios. As with Obama, Bush (41 and 43), and Clinton - and all the others within my lifetime of experience - presidential psychologizing is interesting, and it sometimes provides for emotional release; but as an aid to creating rational portfolios, it's irrelevant.

Fear - and there is no other honest word for it - is not a strategy. And, of all the investment strategies available to us, succumbing to fear is arguably the least successful. The other contender is greed; aka envy. The biggest problem with these "strategies" is that we seldom recognize them in ourselves.   We nearly always have anecdotal data to justify our emotions, which is to say, we watch, read, and listen to the "news".

For the record, it is my professional opinion, easily demonstrated, that "news" - especially financial journalism, whether print, broadcast, or electronic - is far and away investors' best contrary indicator - or worst enemy. This is not just because the media lies and distorts, which it often does, but because it manipulates our emotions. It is a magnet for our own need to justify our view of the world, and to feel important. Not coincidentally, it sells advertising - wisdom, not so much.

Of course, the tendency to fear and greed is as true for me, as it is for you; I don't deny it. Indeed, it's the battle you're paying me to fight on your behalf every day of my life, and I love doing it.

In the September issue of our own print journalism, our monthly Flourishing newsletter, I will expand on this theme, and tell you how I actually do build and manage investment portfolios. I will avoid technical jargon as best I can, because this is something I genuinely want you to understand. Please stay tuned, and watch your mailbox for the September issue of Flourishing.

Until next week,


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

The opinions expressed in this material do not necessarily reflect the views of LPL Financial.