What Are Your Investment Expectations?

In my practice, I see the mindset people have as they watch the likes of Stafford and Madoff being carted away to court and jail is they want to get involved with where there money is invested. They are however still looking for that consistent and unrealistic 12-15% growth though. The optimistic outlook people have, wondering what stocks or sector to "get in to" and which ones to avoid reminds me of someone looking for the gypsy with a crystal ball accurately for which number will come up in a roulette wheel every time the wheel is turned. This is a real problem.

I find investors are looking for the highest rate of return and the best money managers available without even asking "why" they want to put capital at risk.

On the front line working directly with clients, we have to manage peoples expectations of what the "risk-reward" reality is. Furthermore, proper allocation and goal achievement is done in a very non-sexy way of what I like to say is like throwing strikes, fielding ground balls, and hitting consistent singles to win the game. There rarely is anyone that really has a relief pitcher with a 105 mile an hour fastball that is going to come in dazzle the crowd and be invincible. Yet people are always looking for type of investment in the next Warren Buffet, Microsoft or Wal-Mart stock in its infancy and most are severely disappointed when the actualization doesn't meet the expectation just like Madoff and Stafford. We want to believe that there are real things that are too good to be true.

The Aesop Fable "The Tortoise and the Hare" is a great story I feel people need to be reminded of. After the tortoise won the race against the fast rabbit, he looked at the rabbit and said "Slow and Steady always wins."

People need to define what it is they want, educate themselves on the reality of the situation they have and set realistic expectations to position themselves for the best worst case scenario.

If people can understand something is too good to be true, that there are no crystal balls and slow and steady always wins we will be a much healthier and wealthier society.


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