Investor Resolutions for 2024
We are a few weeks into the year, but it’s not too late to set some resolutions for the new year. I have a few… piano (again) and Spanish. Read on to see how I did on last year’s goals (spoiler alert – I did not hit them all). The beginning of the year is also an opportunity to take stock of your portfolios and consider becoming a better investor in the new year. We can help you kick-start that process!
Behave Yourself (And Read a Book)
No one should enter investing without a solid understanding of human internal biases that work against our investing instincts. If you are unfamiliar with Behavioral Finance, why not make it a resolution to read up on the topic? We write on the subject frequently in Insights, sometimes indirectly, but often directly. For example, at the end of last year, we published Behavior: Taming Your Investing Instincts in our Guiding Principles series. For a more comprehensive overview of the topic, pick up a copy of James Montier’s The Little Book of Behavioral Investing. It is an easy read and a great introduction to the topic.
Invest in a New Language
Yes, I plan to spend some time learning Spanish, but that is not what I am recommending here. I’m talking about diversification. Diversification is the one free lunch in finance (you can get more return for the same level of risk), yet most investors have too much home bias. Maybe you do not want to learn Spanish, but how about owning some Spanish stocks? We would not recommend international stock-picking for most. But exchange-traded funds (ETFs) can give you well-diversified exposure to International markets and other asset classes like Gold. We touched on diversification in a recent edition of Insights.
Go on a Diet…
An information diet, that is. Are you looking at your investments daily? Are you consumed by the headline noise coming through the many ports of digital information that we are all plugged into these days? Perhaps it is time to cut back – at least concerning investments. These headlines are designed to elicit emotion, which generally leads to bad investment decision-making. And watching your investments every day also can lead to anxiety. Great investors know the irrelevance of day-to-day moves and the importance of keeping a long-term focus. The reality is that it may take five to ten years to know if you have made good investment decisions. So, set aside your market anxieties and enjoy the day!
If you are a long-term, patient, disciplined, evidence-based investor, I may be telling you nothing you didn’t already know. But for most investors, one or all of these resolutions can be a game-changer in pursuing long-term wealth creation and your version of a great life.
To learn more about how each of the above resolutions is implemented in our strategies, contact one of our advisors. Good luck in the new year!
Contributed by Doug Walters, Eh Ka Paw, David Lemire, Max Berkovich
Resolution Scorecard: 1 for 2…
In the resolution edition of Insights last year, I announced I’d be learning the piano and Python (the programming language). The results were mixed. I played a little piano, but not enough to claim success. I did take a course on Python and know enough to be dangerous. I avoided a resolution on health (losing weight, exercising more, etc.). Ironically, I made significant strides on that front… There’s probably a lesson in there.
Some Sense of Normalcy
This week, earnings had a few moments in the spotlight, displacing the Fed Chair’s near monopoly of the market’s attention. January largely has seen markets pinning their hopes on more rate cuts happening faster, while the Fed has remained firm on anticipating three cuts (when the time is right). Earlier in the month, the market started to come around to the Fed’s way of thinking as economic reports continued to point to a soft landing that would only need minimal cuts to keep on course.
This week, chip maker TSMC gave an upbeat assessment of their business, which served to push markets higher, with the S&P 500 within a few whiskers of an all-time high. With earnings season underway, markets may shift their attention to company fundamentals. While interest rate cuts may be TBD, company earnings and forward guidance are key if markets are to build on the nice rally from the end of 2023.
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