Investment Ideas & the Weekend BBQ

Over what will undoubtedly be a most unusual Memorial Day weekend the possible topics of conversation will be endless. Everything is fair game this year – especially politics (and maybe sex and religion too). Also high on the list will likely be:

  • what is proper social distancing
  • kids’ drive-by graduation celebrations
  • how many Zoom cocktail hours were held in the past 8-10 weeks.

close photography of grilled meat on griddle

Another popular topic that inevitably comes up over holiday weekends and even social-distancing BBQs is “the latest hot investment” or “the brilliant neighbor who made a killing in Fund A or Investment B”. But did you ever notice that rarely does the conversation highlight the losing investments?

Of course, there are those informed investors who bravely recount past losses or fluctuations in a company retirement account. Nearly everyone over the age of 33 has experienced a decline in the value of a 401k or 403b… and the seasoned savers among those may have experienced a rebound over time (please ask me why that happens). But that is the boring stuff.

The hot topic to which I am referring comes from the person who excitedly recounts that he or she made a financial killing by absolutely knowing the perfect market sector or the fund that was purchased at exactly the right time. But the question begs: was this person’s ENTIRE portfolio invested in that ONE market sector or fund? Likely not. In fact, there is a huge part of the story that this person typically leaves out: that the other 50-80% of the portfolio that was NOT invested in this “hot” sector or fund went partly down in value or stayed about the same over the past few weeks.

But that part of the story is not exciting to tell. The part of the story that better represents reality is that portfolios experience volatility – both up and down. Portfolios are made up of pieces, at the most basic: stocks, bonds, and cash. There are different forms of diversification, including the way an investment or account is taxed. There is nearly always a portion of a well-designed portfolio that will be down slightly in value (it could be the bond portion or a purchase made with “bad timing” that is an otherwise solid long-term investment).

The person who starts talking about Asset Allocation and patient investing over the long-haul is the lonely person at the cocktail party or BBQ. But know that if those are the topics that are on your mind as you sip your favorite beverage and tune out amidst the hot stock conversation – you are heading more toward financial peace of mind and informed decision-making.

P.S. My free advice offer still stands: please let me know if there are friends or those important to you who can use advice or encouragement on the basics of spending, saving and investing. No strings attached. The timing has never been more important.

Happy Memorial Day Weekend, Stay Safe & Strong and TGIF!

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