Thank You
October 1, 2019
We’d like to thank you for our success. The success I am writing about is the outperformance of your accounts. At least half the credit for your success is due to your contribution. This occurs because you listen and take actions that overcome the financial behaviors that limit the success of so many other investors.
A large number of investors, maybe we should say speculators, spend too much time reviewing the daily news and stock prices. They underperform and they suffer from one or more of the following three issues: excessive trading, untimely liquidations or purchases, or too large of positions in bonds or cash. This risk averse behavior substantially reduces their returns.
Fear of loss behavior occurs because we seem to be hard wired to feel twice the pain for a loss compared to the joy of a similar gain. This occurs whether or not you know or understand the following financial history.
- On most investments, loses are limited to your investment while gains are theoretically unlimited.
- The stock market rises in three of every four years.
- Recoveries from market declines are reasonably fast.
- The market has risen dramatically since statistics have been collected.
- A list of the worst events that happened in our country’s history have only impacted the market for short periods of time.
Buying and holding stocks takes courage but pays off with outsized returns.
Clients of financial advisors outperform the do-it-yourself investors. Some clients that are most concerned about down markets find advisors that develop “conservative” portfolios. The goal is a portfolio that may underperform over time but not decline as much in down stock markets.
Our goal is to concentrate our portfolios in safe, quality securities that will rebound quickly after market declines. We also seek out fast growing companies at good prices. We believe that “Volatility is the price you pay for outperformance.” We believe that outperformance is better than underperformance in reaching goals. We thank you for your courage and patience.
Katz Family Financial