I’ve been wrestling with server problems and customer support the past week. It’s why this weeks post was shorter than usual. That, and it gave me the excuse to try out a cool charting tool too.
We all deal with computer problems from time to time. A server is simply a computer that fires off web pages when its working correctly. When its not, it’s like dealing with your typical computer problem. You try to fix it yourself or turn to customer support for help, hoping it’s an easy fix or the support lives up to the promises made when you bought in.
Sometimes things work. Promises are delivered. Other times you get all promise and no delivery.
You don’t have to look hard to find over promise, under deliver in the finance industry. Anything with a broker or salesperson attached is a good target for it.
That includes company management. CEOs are constantly selling to would be shareholders.
Managed mutual funds are especially susceptible. The SPIVA Persistence Scorecard loves to point it out. Index funds are vulnerable too. Funds with high fees drag down performance despite the promise.
But investing is never perfect. Fund managers, companies, and strategies have off years. The business cycle doesn’t move in a straight line, the market doesn’t either. We should expect a poor year from time to time.
The question to ask, and one that I’m dealing with, is – is this a one time event or the start of more problems?
It’s easy to be blinded by a great sales pitch. When things work as expected, the returns are there, your portfolio increases in value, then all is right in the world. Until it doesn’t. Only then do you find out exactly what you paid for.
Or maybe its something else?
Maybe my expectations rose. I got used to a few years without problems and expected it to continue. Now that a problem popped up, I freaked out a bit, before seeing my higher expectations slapped back to reality.
You start to expect a higher level of performance when things go right for a while. With investing especially, this is a problem. It’s too easy to expect the S&P 500 to turn in another positive year after it’s done so six years in a row.
It’s easy to dump more money into a fund after six years of straight gains. Maybe it repeats. Or it won’t. But it will end eventually. Don’t be like me and freak out because your expectations strayed from reality.
- How to Tell if Your Retirement Nest Egg Is Big Enough – Wall Street Journal
- It’s Time to End Financial Advisers’ 1% Fees – J. Clements
- Why You Overpay for Financial Advice – M. Housel
- What Lost Decade? – Irrelevant Investor
- Country Risk, Return and Pricing: The Global Landscape in January 2015 – Musings on Markets
- Exposure Offers Clarity in the Risky World of Investing – C. Richards
- Want Another Shot at a ‘Backdoor’ Roth IRA? – Morningstar
- Slippery Tips on Annuities From a Life Coach – NY Times