One of the biggest detractors to investor performance is a lack of conviction. We may have an investment strategy, and may even feel strongly towards it. But is that conviction circumstantial, or is it based on sound principles?

Strategy Chasing

Investors are often swayed by a news story or a forecast to change or “adjust” their portfolio. No matter the rationale, this is evidence of an investor who lacks conviction in an investment strategy.

Most investors are strategy chasers. They have a plan, and when it doesn’t seem to be working out, they change to another plan that looks more promising at the moment.

“Everyone has a plan until they get punched in the mouth”

~ Mike Tyson

Improving Your Conviction

Asking yourself a few good reflective questions can help you adjust your portfolio strategy to make it more enduring and less circumstantial. In other words, it can strengthen your conviction so you are less likely to chase the strategy of the day.

  • If you could only get market updates (news, quotes) once per year, how would you change your portfolio?
  • If you were restricted from selling any security you own for three years from purchase date, how would that affect your investing decision-making process?

Long Term Investing

The majority of investors consider themselves “long term”. Yet they trade based on the news story of the day, the current trend or some forecasts. The reality is they don’t have a durable portfolio that they trust.

The above questions are worthy of consideration and a discussion with me. I don’t know what will happen to the market; no one does. But my experience has been that investors that stick with their plan, even when it’s not working, do better than those that are like a leaf in the wind. Let’s talk about this – let’s make any required adjustments to strengthen your conviction.


(c) 2018 The Behavioral Finance Network. Used with permission.