Review: A Bored Investor Is a Dangerous Thing

We all know investors are generally their own worst enemies. We are always looking for reasons to make changes and “improve” things. We just can’t leave things alone. Now, most of us think about this with regards to times when the markets are volatile, but Jason Zweig reminds us that boring markets can be just as dangerous.

Boring markets, like we’ve been seeing, can leave investors looking for some more excitement (read “higher returns”) in their portfolio. This is almost universally a bad idea. Whether they decide to try their hand at stock picking, commodities, market timing, hedge funds, or whatever the next hot thing happens to be, looking for more excitement means that – at best – you’re adding risk to your portfolio to get those higher returns. Most likely though, you’re just adding expense (meaning lower returns) and a whole bunch of random noise to your portfolio.

So what should you be doing? The same thing as always – stay the course and ignore what the markets are doing. If your portfolio is built to help you reach your financial goals, you don’t really want to be monkeying around with it based on what is happening this month (or any month).

That being said, you need to make sure you maintain the portfolio to ensure that it stays aligned with your goals. As markets move, and things happen, you need to make sure that your portfolio is in line with your objectives. For more on how we do that for our clients, take a look at our ebook, “A Day in the Life of a Portfolio.”


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