The Three-Step Investment Process

Benjamin Haas |



Some of your investments will not work, for any number of reasons. The sooner you become OK with that fact, the more emotionally prepared you will be when it comes time to make the next important investment decision.

I’m not asking you to feel OK with losing or just shrug after seeing an investment in the red or somehow pretend like negative numbers are supposed to feel comfortable. What I am asking you to do is protect yourself from making emotional decisions, or continuously changing your investment philosophy, or throwing your hands in the air when a few investments don’t work. The best way to avoid these pitfalls is to define an investment process that works for you. What's your plan, how is it implemented, how is it reviewed, and ultimately is the process working, even though some investments aren’t? There’s a big difference between investments that aren’t working, and a process that isn’t working.

We know that it's impossible to pick all winners when allocating assets. In fact, we ask our clients to hold assets that act differently under the same market conditions by design. The goal is to make sure that these inverse relationships work in a way that means the total portfolio stays within your comfort zone; trading off potential gains in an attempt to reduce the likelihood of potential losses.

So we suggest a three-step process:

  1. Begin with setting a risk profile that defines the trade-offs you’re willing to make
  2. Then define how you choose investments including how you will determine how much of each investment to hold
  3. Finally, define how to review those investments to make sure they are working per their original objective. And if they aren't, make sure the process defines how and when to replace them

In summary, nobody can be certain what exactly lies around the corner. We have an election, more Federal Reserve rate decisions, and growing concerns about global growth and global debt. Part of dealing with uncertainty, is feeling prepared for anything that can happen in the investment world. So make sure your process is working. Be OK with the fact that not all investments will win.

In the end, we hope our clients feel confident knowing that they have a process that we hope offers consistent returns and a more consistent experience over time. If you have questions about our process, give us a call. We’re here to help align your personal values, vision, and wealth – no matter the environment.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

No strategy assures success or protects against loss.

Article Tracking # 1-551005     Video Tracking # 1- 552403