Driving is a wonderful metaphor for the investment world. Mostly rational behavior along with periodic craziness. While driving to work recently, I experienced a situation I've encountered before on the streets. I'm minding my own business, driving at the speed limit on a very familiar street (50 mph)-ok I was doing 52-when I noticed that many cars were rapidly approaching and whooshing by me. I checked my speedometer, and yes I was still driving around the speed limit. I had a momentary impulse to increase my speed to keep up with the others but realized that made no sense. Traffic school is not my idea of fun.

I've also experienced the opposite situation. I've noticed that occasionally I seem to be passing most of the other cars, despite remaining within the speed limit. And one thing you don't want to do is stick out as the fastest car on the road. That's a recipe for a speeding ticket. Just ask my 20-year old daughter Alyssa. But I digress. When I do notice that I'm driving faster than others, I slow down. I'm usually going the speed limit, but since most cars are going slower, my speed seems faster.

How does this relate to investing? On the streets drivers sometimes get caught up in their immediate surroundings and drive too fast, and occasionally too slow. Similarly, markets rise and fall. Investors can be overly influenced by the current environment and can become too optimistic, and sometimes too pessimistic. It's the nature of markets that, when people are involved, actions will carry too far in both directions. What's needed on streets and in markets is to understand the impact current events can have on our behavior and control their influence. In short, RESIST HERD BEHAVIOR. I know, boring. A little change of pace can be fun. But if you want excitement behind the wheel, go to the race track. And if you want excitement in investments-well, most of the time that's not a positive. "Gee honey, we just lost half of our life savings" is not the kind of excitement we're looking for.

Most people, interested in personal survival, usually avoid the temptation to drive too fast on the streets. However, investing can be a different story, where individuals sometimes engage in the financial equivalent of reckless driving. Our approach is to handle the investment world with BALANCE AND MODERATION, staying positive in depressed environments, and behaving cautiously when others get giddy. Staying within speed limits can help you avoid the investment equivalent of a ten car pile-up on the street.