A New Era is cause for a new way to manage investments.
There are two prevalent models or management approaches that dominate the investment marketplace. Not surprisingly, both parties think they have it right and both, ironically, have it wrong.
The two models are what I call, “Buy and Hold” and “Market Timing”
The “Buy and Hold” model is espoused by investors who claim that historically, the markets will take care of investors if they are disciplined and “stay the course” with their investments. Ingrained in this model is a message of, “sit back, relax and hold your breath when your statements look bad.”
One only needs to look at October of 2008 to recall how deeply flawed this perspective can be. Often termed, “set it and forget it” by cynics, the “Buy and Hold” model fails to take into consideration the unprecedented market swings in the last five years of Bear market activity. The “Buy and Hold” model communicates to investors that you have to slog through the losses and it will all come out in the wash. Our opinion is that this is lazy and that advisors should avoid loss not justify it.
The “Market Timing” model runs the opposite direction. If the “Buy and Hold” advisor doesn’t look at enough variables and data to drive their choices, the “Market Timing” advisor looks at too many and often the wrong ones.
Convoluted macro-economic theories trying to anticipate the markets are dangerous for investors and closer to guesswork than real investment theory. It’s really based on the emotions of the advisor using theory to justify their actions. The criticism of market timing from the “Buy and Hold” camp is that they are stock jockeys churning accounts to generate fees with little or no financially legitimate rationale. And there is truth in it. Much is said about the abuses of the “Market Timing” advisors routine moving portfolios to this or to that to generate fees at every transaction. Most advisors who watch the markets and try to “out-think” them are well intentioned but poorly equipped.
Fortunately, there is a new model. There is a third model that Liberated Investors leverage to great effect. This model is new but in many ways, it’s as old as the Dow and really took root in the mid 50’s.
The Liberated Investor model borrows the discipline of “Buy and Hold” but not the passivity. It borrows the responsiveness of the “Market Timer”, but instead of emotion driving the choices, our model looks at facts and logic. So in essencewe take the best of both models and combine them into a fact-based, disciplined approach that we call The Liberated Investor Model. The Liberated Investor Model is really just common sense without all the fluff.
Don’t die a death of investing by using either the broken Buy and Hold or Market Timing approaches—Find an advisor that subscribes to the Liberated Investor Model and relax and grow wealth.