I’m not suggesting that Tums’ antacids are the solution to your investment woes; but, if we pause for a moment and think it through, I think we can use the word “Tums” as an acronym to help get you through these turbulent financial times.
Here we go – Tums.
Let’s begin with the letter T. T stands for time and time softens the effect of short-term events. You may often hear the phrase – “Think long term”. That’s a difficult concept to sometimes wrap your mind around; but, thinking about two, five or ten years from now, might help to provide some future prospective. Yet, perhaps instead of looking forward, maybe we should look back in time. Based on today, two years ago was okay, five years ago was pretty good and ten years ago, things were pretty darn good. So, T, which stands for time helps to soften the effect of short-term events.
Our next letter is U. U is a reminder to be Unconnected from all the noise. Do you wake up in the morning and check your news feed before going to the bathroom or worse yet, while you’re going to the bathroom? There are folks that check the news, their portfolio and the yelling commentators throughout the day. The more you engage your phone, the more frustrated you probably become with the world. Become one of the “unconnected”.
The next letter is M. The M stands for Managing your expectations. Realizable expectations help to bring a sense of reality back into focus. Many folks have seen unusually profitable financial markets until just this year. There’s an old saying that goes like this – Some days are diamonds and some days are stones. Many people forget that baseball great Babe Ruth struck out more times than he hit home runs. Yet, he’s remembered for hitting home runs. What he should be remembered for is managing his own expectations and consistently going up to bat.
Lastly in our example of Tums is the letter S, which stands for systems to stabilize the extremes. Today, people often feel like they’re either winning or they’re losing. They’re either celebrating a twenty percent gain or complaining about a twenty percent loss. You may be able to stabilize those extremes if you put a system in place. We have a thermostat in our office that keeps the temperature between sixty-eight and seven-two. It’s calibrated to minimize the extremes. If I’m on the beach, I love temperatures in the nineties. If I’m snow-shoeing, I prefer temperatures in the thirties. Are you investing in the extremes, especially searching out the new ‘hot’ thing? Perhaps you need a system of stabilization.
So from now on, remember T.U.M.S. –
T: Time softens short term events.
U: Be Unconnected from the noise.
M: Manage your expectations, and
S: Stabilize your investing with systems.