Wednesday, April 30, 2014

Davy Crockett

Last night I was in a continuing e-mail dialogue with a young adult who is learning to manage her investment portfolio.  She is smart, working on her understanding, and eager to learn more.  Her college background is in the humanities and her interest in business and financial markets had been, until the last year or two, limited and that may be an understatement.  She came of age during the great recession and that no doubt had an influence that led to a certain reticence to make investments.  Her risk profile could only be described today as under invested.

She wants to change that in a measured way, and I am working with her on that by incrementally giving her suggestions that she may choose to listen to or not.  She has individual stocks in her portfolio that were chosen by others when she was not of age.  She has some index funds and a variety of hybrid funds.  She has lots of liquidity.

My most recent suggestions have been to add a Total Market index fund to her portfolio and also a hybrid bond fund with proven good management.  Last but not least I have been encouraging her to make a few individual stock purchases based on her observations and experience, as well as taking a gander at the financials.  My early positions in Apple were based on her non-investment focused comments and the same can be said for an investment position in Lululemon, now departed but very profitable.

Using those examples, and following the Peter Lynch advice of invest in what you know, I have encouraged her to make a few choices.  I ended last night's e-mail on that subject with "Don't rush.  Feel right about it, but do go ahead."

Waking up early this morning I realized that I had been paraphrasing my early childhood hero Davy Crockett.  His famous dictum, simple and widely quoted, was "Be sure you are right, then go ahead", distinctly similar to the advice given here.


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