The ‘Next’ Big Thing
“Very few institutional investors are buying Bitcoin. It’s just that those few that are buying are extremely vocal about their positions. They need to convince others to buy to push up the price so they can sell.”
At Longhurst we believe that letting short-term trends influence your investment approach is counterproductive to pursuing your long-term financial goals.
When confronted with the choice of whether to include the ‘next’ big thing in your investment strategy or portfolio, it may be helpful to ask yourself the following 4 questions:
- What is this strategy claiming to provide that is not already in my portfolio?
- If it is not in my portfolio, can I reasonably expect that including it or focusing on it will increase expected returns, reduce expected volatility, or help me achieve my investment goal?
- Am I comfortable with the range of potential outcomes?
- Is the Fear of Missing Out (FOMO) influencing my thinking?
If you are left with any doubts after asking yourself these questions, it may be wise to take a step-back, defuse the emotion of wanting to ‘buy’ into this new investment, and instead take some more time to think it over.
Within equities (or the Great Companies of the World), for example, a market portfolio offers the benefit of exposure to thousands of companies doing business around the world with broad diversification across industries, sectors, and countries.
If this portfolio has been designed and recommended by a competent and caring Financial Planner, where the portfolio’s primary focus is on ensuring you achieve and maintain your version of Financial Independence, why would you then choose to get caught up in the noise that is the ‘next’ big thing and buy something that takes unnecessary risk with your money …. ?
THE VALUE OF INVESTMENTS AND THE INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED.