Most New Year 2014 resolutions include a commitment to change your past investment management behavior. This year the best guide on how to make those changes is to follow the favorite local football team.
The Minnesota Vikings are in the process of “rebalancing” their football team account. They have sold off the pieces of their team that they consider to be the worst parts of their organization. Those pieces include firing the coaches and letting some players leave the team.
The Vikings will keep the best players they currently have. They are not going to trade Adrian Peterson. And they need to find a quarterback who can get the ball to Cordarrelle Patterson.
Do you see the pattern here? The Vikings will keep the players that they like, and they will replace the ones they don’t like. The Vikings will also hire new coaches. These decisions are based on last season’s performance.
Wall Street advises you to rebalance your investments a completely different way. They advise you to sell some of your investment winners. With that money, they want you to buy more of your investment losers.
This is the investment management behavior that you need to change in 2014.
The best football teams have the best coaches and players. The Vikings are changing coaches and keeping their best players. They are also replacing the players that leave with better players.
Make the same kind of investment management decisions with your stock and bond market investments in 2014.
Make a resolution to keep your best investments from last year. Sell some of your worst investments from last year. Be a better investment manager coach. Find better investment players.
Ric Lager
Lager & Company, Inc.
