Roskow Blog

If you want a thrill ride try Luna Park

Thursday, July 28, 2011

There’s an old saying: “If you owe the bank a million dollars you have a problem, but if you owe the bank $100 million, the bank has a problem”. The US President describes the possibility of his government defaulting on its loan payments as ‘financial armageddon’. If the rest of the world is the bank, who’s got the problem? Presumably you. Fuel for the fire under an already boiling cauldron of economic woes.

Is it possible to sidestep the financial tsunami by converting your super to cash and selling up your investments to buy gold?

Pause a moment, take a breath and acknowledge that the media is a terrorist who deals in noise, and if there is none to sell it will go and make some. Just ask Rupert Murdoch. It’s a headline-grabber to declare that we’re all going to hell in a hand basket because of Greece and the USA but it’s far from correct. Sure, the best economists in the world are more informed on financial current events but the truth is their crystal ball is just as cloudy as yours.

Here’s the thing: if you are acting on media sound bites then your decisions aren’t supported by fact. You’re driving under the influence of a toxic cocktail of hearsay, emotion and prediction. You’ll be lucky to make it home if you’re behaving irrationally. The best you can hope for is luck, and that’s no investment plan.

Instead bring your focus back to what is within your control. You can’t control the weather but you can choose what climate you live in. Does your wealth comprise a collection of investments or is it a structured portfolio (your ‘climate of choice’). Are you reacting to storm warnings and missing out on the best washing days for fear of rain?

Investing successfully isn’t a matter of knowing when to be in and when to be out, nor is it about backing the right horse. Truth be told, growing your wealth is actually a repetitive, disciplined process that is pretty boring. (And it should be – hey if you want thrills try Luna Park.)

So here’s the advice ...

If you are feeling the hairs on the back of your neck stand up in response to the headlines, if you are checking the news more frequently to see whether the US is going to default on August 2, or if you are losing any sleep over what to do with your money ... then call us. It might actually be true that you need to do something about your money. But simply pulling the trigger because something moved can get you into serious trouble.



Special thanks to Daniel Brammall for his assistance in preparing this blog post.



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