MAKING INVESTMENT DECISIONS

Are your choices based on evidence or emotion?

Courtesy of Melissa J. Stein

Information vs. instinct. When it comes to investing, many people believe they have a "knack" for choosing good investments. But what exactly is that "knack" based on? The fact is, the choices we make with our assets can be strongly influenced by factors, many of them emotional, that we many not even be aware of.

Deal du jour. You've heard the whispers, the "next greatest thing" is out there and YOU can get on board, but only if you hurry ... sound familiar? The prospect of being on the ground floor of the next big thing can be thrilling. But while there really are great new opportunities out there once in a while, often those "hot new investments" can go south quickly. Jumping on board without all the information can be a bit like gambling in Vegas ... the payoff could be huge, but so could the loss. A shrewd investor will turn away from spur-of-the-moment trends and seek out solid, proven investments with consistent returns.

Risky business. Many people claim NOT to be risk-takers, but that is not always the case. Most proficient investors aren't reluctant to take a risk, they are reluctant to accept a loss. Yes, there's a difference. The first step is to establish what constitutes an acceptable risk by determining what you're willing to lose. The second step is to always bear in mind the final outcome. If a taking a risk could help you retire five years sooner, would you take it? What if the loss involved working an extra ten years before retiring ... is it still a good risk? By weighing both the potential gain AND the potential loss (while keeping your final goals in mind), you can more wisely assess what constitutes an acceptable risk.

The crystal-ball approach. Some investors attempt to predict the future based on the past. As we all know, just because a stock rose yesterday, that doesn't mean it will rise again today. We know this, but often we "shrug off" this knowledge in favor of hunches. Instead of stock picking, you can exercise a little caution and seek out investments with the potential for consistent returns.

The gut-driven investor. Some investors tend to pull out of investments the moment they lose money, then invest again once they feel "driven" to do so. While they may do some research, they are ultimately acting on impulse. This method of investing can result in huge losses. For example, let's say you have $100 and are given 10 opportunities to bet $10 on a 50/50 chance event. If you lose the bet, you lose the $10. But if you win the bet, you make $25. What would you do? How many times would you bet? While the outcome is based on chance (and therefore impossible to predict), we do know this ... if you were to bet at every single opportunity, you'd stand an 87% chance of ending up with more than $100. If you bet sometimes and not other times (based on your gut), the probability is that you would not do as well. So this is yet another argument for long-term investing.

Eliminating emotion. Many investors "stir up" their investments when major events happen ... including births, marriages or deaths. They seem to get a renewed interest in their stocks and/or begin to second-guess the effectiveness of their long-term plans. It's a case of action-reaction: they invest in response to short-term needs, instead of their long-term financial goals. The more often this happens, the more incoherent their so-called "financial strategy" becomes. If the financial changes they make are really dramatic, it can lead to catastrophe. Many times, there is no need to fix what isn't broken, or make a U-turn away from what they've done right. By enlisting the assistance of a qualified financial professional (and relying on their skill and expertise) you can be sure that investment decisions are based on facts, and made to suit your long-term objectives rather than your personal, changing emotions or short-term needs.

Melissa J. Stein is a Representative with Cetera Advisors LLC and may be reached at Stein Wealth Advisors at melissa@steinwealth.com or 724-260-0491. Stein Wealth Advisors' web site: www.steinwealth.com    

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.  

These are the views of Peter Montoya, Inc., not the named Representative or Broker/Dealer, and should not be construed as investment advice. Neither the named Representative or Broker/Dealer give tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information. 06032013-608 JD

While Google Glasses do not (as yet) completely replace your laptop, iPhone, iPad or favorite camera, it is completely hands free and signals an entry into the future world of possibilities for personal devices. Currently cell phones are ubiquitous...in a jeans pocket, in hands, in a purse or nearby on a desk. Google Glasses can be on your face all the time! (Individual prescriptions can be accommodated.) Google glasses are made with a lightweight, titanium frame, a thick part at the right side that houses the battery, buttons, touch pads and speaker. The whole package comes with a "snap-on sunglasses visor, a clear visor, and a Micro-USB charger...[and] a rigid cloth pouch" for storage. (4) Glass runs on Android, but can connect to iOS also. It can connect via Bluetooth or Wi-Fi to a phone, a laptop or even work alone as a disconnected offline camera. It has 12.5GB of onboard storage and a battery that's meant to last a day. (5)

As exciting as the whole idea is, there is already discussion about social etiquette and privacy. Will this device give crushingly too much constant feedback? What about wearing them while driving? Is it a social imposition to have your Google Glasses on while interacting with others? What about wearing them during a conference or a client or peer meeting at your job? Must one tell another person when silently blinking a picture of a personal interaction?

In addition to the personal interaction trust and privacy issues, are there legal ramifications? Congress thinks so. "Rep. Joe Barton (R-Texas) and seven other members of the Congressional Bi-Partisan Privacy Caucus have sent a letter to Google CEO and co-founder Larry Page requesting answers to a series of privacy questions and concerns raised by the camera-equipped glasses. "As members of the Congressional Bi-Partisan Privacy Caucus, we are curious whether this new technology could infringe on the privacy of average Americans." (6)

On a lighter side, let's lay aside legal issues and think about something really important...what colors will be available for these glasses? The answer from Google's web site is Charcoal, Tangerine, Shale, Cotton and Sky. Using Google Glass's translation ability to turn the marketing-speak into plain English, that is black, orange, grey, white and blue. While you are thinking about which color you want, spare a few thoughts about what might come next. Film star Morgan Freeman has a great idea for the next frontier for Google. Recently the 75 year old actor dozed off during a television interview with his Now You See Me co-star Michael Caine. A film clip of the sit-down nap with Seattle's Fox affiliate KCPQ shows Freeman briefly asleep. The good natured, veteran star took to his Facebook page soon after to explain what happened. "Giving his own spin of the 'just resting my eyelids' excuse, Freeman wrote: 'Regarding my recent interview, I wasn't actually sleeping. 'I'm a beta tester for Google Eyelids and I was merely taking the opportunity to update my Facebook page.' " (8) So...what's next? Maybe Google Eyelids!