As we near the end of the year it is a good time to re-examine our financial plans. We can look back over the year and make adjustments to our plans for the year ahead but it is important to stick with our overall strategy (assuming that we have one). Jumping around with the movement in the markets is usually not a strategy that produces good long term outcomes.

Investors are often in search of the investing "black box", a framework for making decisions that is fool-proof. While this doesn't exist, there actually is a strategy that has demonstrated how to achieve better overall returns. Every couple of years, Dalbar, a research firm examines returns in the markets and compares this to actual investor returns (Quantitative Analysis of Investor Behavior). Year after year, the actual returns investors receive are far less than what markets provide- usually 5-7% per year less. The reason- too much trading, too much timing, not enough strategy.

Research shows that investors have an easier time making good decisions when fear doesn't overwhelm them, meaning when markets are generally rising. It is when the markets decline and fear/panic set in that decision-making suffers and investors bail out. As I outlined in a recent blog post, An Epic Disjunction we have to choose wisely and that is much easier within the framework of an integrated strategy.

It is easy to choose pessimism with the myriad of worries on the horizon but a good case for optimism can also be made given the actual earnings of companies and the huge ($8.6 trillion) amount sitting on the sidelines in investors and corporate accounts. By most measures, stocks are below their historic levels relative to earnings despite the overhang of negative news.

Having clarity about "why you invest" will help provide context to the choppy markets. 2012 will likely be different than 2011. Make good choices that are focused on your long term goals and avoid being consumed by the mire of the day to day markets. We stand ready to help you (and your friends, family or colleagues) in the year ahead. We want to change the way you think about investing.