{"id":7046,"date":"2018-03-14T15:48:00","date_gmt":"2018-03-14T19:48:00","guid":{"rendered":"https:\/\/www.zacksim.com\/?p=7046"},"modified":"2022-02-26T13:15:19","modified_gmt":"2022-02-26T13:15:19","slug":"4-best-practices-investors","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/4-best-practices-investors\/","title":{"rendered":"4 Best Practices for Investors"},"content":{"rendered":"

Paul R. from Evansville, IN asks: <\/em>Hi Mitch, I\u2019m recently retired and am taking a greater interest in investing. Don\u2019t worry \u2013 I don\u2019t plan on becoming a day trader or anything. I\u2019m just wondering what you might consider some best practices for monitoring trends\/news and managing my portfolio?<\/p>\n

Mitch\u2019s Response: <\/strong><\/p>\n

Thanks for writing, Paul. My biggest piece of advice to you is probably not as technical in nature as you were hoping for, but here it is: Less is more. <\/em><\/p>\n

One of the biggest obstacles to successful investing, in my opinion, is \u2018information overload.\u2019 Investors often get wound up in day-to-day events and news stories, which frequently err on the side of sensational. The news you might hear on CNBC, <\/em>for instance, tends to focus on stocks or other securities that are either \u2018hot now!\u2019 or possibly headed for a major downturn. It\u2019s either a big opportunity or a dire warning. Rarely do I see pundits urging investors to keep their cool while maintaining a well-diversified, long-term view to portfolio management. That type of advice is way too boring, and it doesn\u2019t sell newspapers.<\/p>\n

But the irony is that it\u2019s often the right approach to follow. In your case, I\u2019d offer you three tips that I believe can help you become a more engaged, informed investor:<\/p>\n

1. Become a \u201cMacro Guy\u201d<\/strong> \u2013 this is a term I just made up, but it speaks volumes for how to approach every day news and economic events. \u2018Macro guys\u2019 are those who focus on trends, not day-to-day movements. Being a macro guy means focusing on economic data releases, earnings reports, and other key economic factors like trade deals. The key to being a good macro guy isn\u2019t just reading the reports when they come out, however. It\u2019s about seeing how the data fits into the longer-term trend. The opposite of a macro guy is an investor that looks at day-to-day movements in securities prices based usually on event-driven factors. While useful for portfolio managers, this type of analysis is not very beneficial to long-term investors, in my opinion. There\u2019s a dizzying amount of new information every day, but much of it doesn\u2019t affect the long-term trend of the markets. And that\u2019s what matters to the long-term investor.<\/p>\n

2. Avoid the Hot Trends \u2013 <\/strong>the more you start paying attention to financial news, the more exposed you will become to the next \u2018hot\u2019 trend in financial markets. Think cryptocurrencies and FAANG stocks, for instance. In my view, the more investors hear about wonderful performance in a particular category, the more they are inclined to buy-in and potentially abandon their long-term approach. The potential problem is that investors who do so are vulnerable to buying into a trend that may have already run its course, meaning we see a lot of investing at or near the top.<\/p>\n

3. Become an Ardent Proponent of Diversification \u2013 <\/strong>in my opinion, investors who want solid long-term, risk-adjusted returns need look no further than what I believe might be the oldest trick in the book: a diversified portfolio of stocks. How you diversify that portfolio is up to you \u2013 which sectors, styles, securities, or size classes to overweight and underweight. At Zacks Investment Management, we base our diversification decisions first by understanding the investors\u2019 needs and goals. Then on top of that we layer our market outlook to determine what types of securities we want to purchase in the portfolio, but we almost always take a wide-ranging approach that might include several sectors, regions, and sizes of companies that we want to own1<\/sup>. And we are constantly evaluating trends to determine where we want to overweight and underweight. But the theme of diversification exists throughout our process and approach.<\/p>\n

4. Know Your Net Worth<\/strong> \u2013 Lastly, it\u2019s always important to know your net worth. Whether you are just starting out or a long-term investor, knowing your net worth is important to your financial well-being.<\/p>\n

Calculating your net worth can give you a better idea of where you stand in terms of your long-term investment goals. From there you can look at what strategies, risks and additional factors will have the most beneficial effect on your investments long-term.<\/p>\n

To help you understand how to measure you net worth, download our guide Measuring Your Net Worth. Simply click on the link below to get your copy today!<\/p>\n","protected":false},"excerpt":{"rendered":"

Paul R. from Evansville, IN asks: Hi Mitch, I\u2019m recently retired and am taking a greater interest in investing. Don\u2019t […]<\/p>\n","protected":false},"author":1,"featured_media":7436,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[66,71],"tags":[],"class_list":["post-7046","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mitchs-mailbox","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/7046","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=7046"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/7046\/revisions"}],"predecessor-version":[{"id":10890,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/7046\/revisions\/10890"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=7046"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=7046"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=7046"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}