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Clear Thoughts
A Tale of Two Investors
| One investor learns that Clear is committed to helping investors make money. A second investor learns that Clear invests based on computerized logic and not emotion. |
An investor (call her investor number one) called this week to remind me that there is life beyond the markets (responding to my post here last week). Of course this is easy for her to suggest, as she goes about life knowing as an asset management client, we are selecting and directing all of her investments.
Investing is a serious business. Our goal is helping people make money by investing their hard earned money in the stock market. Clear provides stock recommendations and rationale, and either invests for people or provides the recommendations.
Investor number two is a totally different story. He called after allowing his free trial subscription to expire and wanted to know what to do next. He had purchased five stocks for his own portfolio after reviewing ours. He purchased only five stocks, because he instinctively liked the company stories, or the sector or both. He quickly checked them out on a few web sites that provide charting and statistics. Also, he only purchased five because he felt Clear had held some of the other stocks long enough, or had already gained too much for him to purchase them now.
His actions are all too human, and emotional. We too are human and emotional, but with one very large exception, our computer programs direct all of our buying of stocks, the timing and the specific amounts. Our computers help with the selling of stocks, and additionally, we have a strict set of stops and rules-based procedures to address a multitude of market situations. Bottom line, there is no emotion involved in our process.
All humans experience emotions when investing, including us, but we do not act on them. All of the words to describe the emotions of investing can be interpreted in many ways and in many different circumstances. Here are a few of them: Joy of a win; Anger of a loss; Attachment to a brand or stock without regard to fundamentals; Contentment causing a loss of focus; Surprise from a good or bad event that distracts from the ultimate investment objectives; Anxiety/Fear that forces a need to act, even if the action may be counter productive; Hope in place of knowledge and statistical probability; and finally Sadness/Disgust which clouds decisions and focus.
In our opinion, none of these emotions have any place in investing. Fundamentals, valuation, liquidity, these are what we believe to be the important measures. Emotions merely distract your from your ultimate investment objectives.
In the case of the second investor, his investing intelligence and ability were influenced by the thrill of the potential of winning; being right. He also was overwhelmed by the realities of a busy life filled with work, friends and family and everything else that is thrown at all of us in this day and age limiting him from spending the time to adequately manage his investments. After realizing his own very typical human behavior, our investment team seriously discussed with him his goals, time horizon, tolerance for risk and how much time and interest he has to invest on his own. Next, we discussed a proper asset allocation. He then determined for his work and life style he was best off allowing us to manage his portfolio, and keep his Clear emails arriving (you can change your preferences at anytime by clicking My Account). He is invested in four portfolios and reads his newsletters and alerts at his leisure. Today he achieves the performance we post on our web site and is a very informed investor.
Each investor needs to decide what is best for them. Many people enjoy self-directed investing and benefit from subscribing to our portfolios, trades and weekly reviews. Others benefit from allowing Clear to manage their portfolios and enjoy and learn from our communications. All we hope (yes an emotion) is when you are making investment decisions, is that realistic time frames are set, goals are addressed, and of course, emotions are left at the door.
Have a great weekend.
Andrew Corn
CEO, Founder, Husband, Father, Friend and Human.
acorn@clearam.com
If you would like Clear to manage your investments, please click here to open an account. To learn more, please email me directly. |
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