The election is over and Mr. Trump has been elected the 45th President of the United States of America. Now what? For the past eighteen months or so America has been polarized by the election. Investors were absorbed with the political bantering and now will direct their gaze to the next hurdle, most likely a decision from the Federal Reserve on interest rates. Should investors always zero in on the near-term hurdle?
Edwin Moses is one of the most decorated athletes of our time. He made a career of jumping over hurdles. Mr. Moses was the Olympic Gold Medalists in the 1976 Montreal Games by winning the 400 meter hurdles in world record time. After the Olympics, he dominated his sport by winning 122 consecutive races a feat (not feet) that landed him in the Guinness Book of Records.
Mr. Moses had to clear ten hurdles while running once around the track. I’m sure he didn’t panic when he arrived at the first hurdle because he had a plan. He also had to clear nine more hurdles before he won his race. To be a successful hurdler, a hurdler must look beyond the near hurdle and focus their eyes on the horizon. A runner who paid attention to the closest hurdle usually didn’t fare well in the race.
Unlike Mr. Moses, investors will always have hurdles. Is it wise to pay attention to these obstacles? The news media and industry “experts” want to divert your eyes away from your goals and have you focus on the latest threat to your investment survival. Look beyond the near-term issue and focus on your long-term investment goals like a great hurdler.
How can you be a great investor and avoid the hurdles?
1. Lock your eyes on the investment horizon and pay attention to your personal financial goals.
2. Diversify your investments across stocks, bonds and cash.
3. Concentrate on things you can control like saving and spending.
4. Be greedy when others are fearful as Warren Buffett has famously said.
5. Establish a cash emergency fund so you’re not forced to sell your long-term holdings at disastrous prices.
6. Avoid market timing. Trying to catch the top or bottom of a market cycle historically has not worked well for investors.
7. Do not trade excessively as this will increase your costs and fees. There is an inverse relationship between the fees you pay and the returns you generate.
Elections come and go. Markets go up and down. The sun rises and the sun sets. If you focus on the long term, good things should happen.
Obstacles are those frightening things you see when you take your eyes off your goal. ~ Henry James.
Bill Parrott is the President and CEO of Parrott Wealth Management, LLC. www.parrottwealth.com
November 9, 2016
Note: Past performance is not a guarantee of future performance. Your results may vary.
 http://edwinmoses.com/icon_bio.html, accessed 11/7/2016.