By Eric Reich
Imagine walking into the room and looking at the television only to see a severed horse’s head in a man’s bed. If you didn’t know what you were actually watching, or if you are a huge animal lover like me, you would quickly change the channel assuming there was a deranged horror movie on. While this might be a perfectly normal assumption, the brief scene you just witnessed lacks context. The reality is that what you actually saw was a pivotal scene in one of the best movies ever made, “The Godfather”. By not watching the entire movie, you may well have missed out on a cinematic masterpiece.
By now you are thinking, when did the financial guy become a movie critic? I thought he wrote about retirement, investments, etc. Well, here is where the correlation between investors and the person who walked into the room and saw that famous scene come together. Short-term investment performance is exactly like walking into a room and seeing a movie scene without context. “I bought this investment 6 months ago or 12 months ago and it’s done nothing but gone down! I could have made at least 5% in a money market and risked nothing.” “I think I should sell out of the investment.” The investor walked into a movie scene without any context. Yes, there are times when short-term near riskless investments do well, but those are the exception, not the rule. I have 220+ years of data to back that up. The reality is that well-researched, risk investments that are left alone to grow over time based on your risk tolerance may likely outperform the short-term “feel-good” overly safe investments. Typically, that outperformance can be dramatic. When compounded over many years, the difference can be life-changing.
I understand the natural negative reaction to poor short-term investment performance, even more so if you are not an experienced investor and are gun-shy about investing in the first place. The reality, however, is that if you just take the time to “watch the whole movie”, you might see that the investment you made could turn out to be better than you ever expected. Don’t judge a long-term investment by its short-term performance, but rather give it a chance to do what it is intended to do.
I’m going to make you an offer you can’t refuse (see what I did there). Give your investments time to function as they should over a longer time period, and you’ll likely thank me later.
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Reich Asset Management, LLC is not affiliated with Kestra IS or Kestra AS. The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. To view form CRS visit https://bit.ly/KF-Disclosures.
Eric is President and founder of Reich Asset Management, LLC. He relies on his 25 years of experience to help clients have an enjoyable retirement. He is a
Certified Financial Planner™ and Certified Investment Management AnalystSM (CIMA®) and has earned his Chartered Life Underwriter® (CLU®) and Chartered Financial Consultant® (ChFC®) designations. A lifelong resident of Cape May County, Eric resides in Seaville, NJ with his wife Chrissy and their sons ,CJ and Cooper, and daughter Riley.
