Most investors spend their time worrying and focusing on things that are simply out of their control, such as speculating what the stock market will do next. It can be hard not to when we have 24/7 media coverage and constant predictions. However, to ensure we reach our goals, our energy is far better spent focusing on individual strategies and actions that we can own and control.
Warren Buffett famously studied under Benjamin Graham, the author of “The Intelligent Investor,” and creator of one of the best investment analogies of all time. When buying or selling an investment, Graham declares that the trader you are buying or selling from is “Mr. Market“. Mr. Market, is not a thoughtful investor like you and I. He suffers from violent mood swings. Some days he will offer to buy your stocks for far more than they are worth, while other days he will offer only pennies on the dollar.
Graham’s analogy still holds true today nearly 70 years after written. We can’t predict when Mr. Market will have one of his tantrums or decide to throw a party.
Fidelity Investments, has a terrific chart that showcases why we should avoid trying to time the markets at all costs. You may have heard the expression, “it’s not about timing the markets, but time in the markets.”
If we know to tune out the noise and ignore the market swings, what can we control and where should we focus our energy and efforts?
We can control our financial future by:
- Focusing on our savings rate
- Committing to flexibility
- Staying Invested
- Being diversified
- Managing for taxes
- Controlling fees
Rather than trying to speculate, predict and somehow control Mr. Market, we should continue to push ourselves to focus on the things we can control in our daily finances and investment strategy. By putting our energy into controlling what we can, we are able to take ownership of our investment strategy to meet our personal goals.
Ready to take control of your financial future? We can’t wait to help. Talk to us today.