Kaizen Wealth Management » Investor Behavior

2009 Net Fund Flows

Kaizen Wealth Managment — Mon, 08 Feb 2010 22:33:04 +0000

Despite and impressive run in equities, $375 billion moved into bond funds, and $9 billion exited equity funds. Our concern is that investor behavior is once again the culprit and this inflow/outflow occurred after the equity pullback early in 2009 – causing this.

Chart: J.P.Morgan Asset Management

Bubbles…Is Gold next?

Kaizen Wealth Managment — Tue, 08 Dec 2009 16:25:12 +0000

The WSJ recently published a chart that we thought was worth examining, and then noting here. The chart draws an excellent comparison between the recent surge in gold prices to previous bubbles of the last decade, giving us a cautionary perspective for those pouring money into gold today:

The Power of an Investment Policy Statement

Kaizen Wealth Managment — Tue, 01 Dec 2009 20:54:18 +0000

Before we can give appropriate investment advice, we work with our clients to construct a comprehensive Investment Policy Statement (IPS). Creating an Investment Policy Statement (FPA Press), by Norm Boone and Linda Lubitz Boone, spells out the purpose and benefits of using an Investment Policy Statement:

Identifies specific client objectives, risk tolerance, and time horizon.
Explains the investment strategy and defines asset-allocation policy.
Establishes a process for making investment decisions and guidelines for future decision-making.

The IPS may also serve as a forum for client-advisor communication and moderate influences against making decisions in an emotionally-charged environment, helping to avoid negative investment behavior. The policy statement may also establish a record of decisions and an objective means of measuring performance, as well as help with monitoring progress.

The information gathering process insures that we raise and discuss all pertinent investment issues.

For a sample Investment Policy Statement, or to discuss your investment process with us, please call 843-577-7701 or email info@kaizenwm.com

20-year Annualized Returns by Asset Class

Kaizen Wealth Managment — Thu, 05 Nov 2009 17:45:53 +0000

20-year period ending 12/31/08.

S&P 500 Index = 8.4%
Average Investor = 1.9%
The culprit = Investor Behavior

source J.P. Morgan Asset Management

Forecasting: Interest Rates and Market Changes

Kaizen Wealth Managment — Tue, 29 Sep 2009 17:41:11 +0000

The function of economic forecasting is to make astrology look respectable.
- John Kenneth Galbraith

I’ve been in the forecasting business for 50 years, and I’m no better than I ever was, and nobody else is either.
- Alan Greenspan

And the cost of reacting to forecasts, stock market promoters and other financial media commentators - leading to poor investor behavior: about 6.5% per year over the past 20 years.

Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling.
– George S. Clason [The Richest Man in Babylon]

Two-Thirds Don’t Have a Financial Plan

Kaizen Wealth Managment — Fri, 25 Sep 2009 15:56:50 +0000

Despite increasing pressure to slash debt and rebuild retirement funds, nearly two-thirds of consumers do not have a written financial plan, according to the 2009 National Consumer Survey on Personal Finance.

The survey, released today by the Certified Financial Planner Board of Standards, found that 64% of respondents do not have a written financial plan in place.

“Those in the know who are using financial planning are finding it a valuable experience,” Eleanor Blayney, consumer advocate for the CFP Board, said in an interview. “There are just too many people who are not using it.”

We couldn’t agree more.

It’s All about Discipline

Kaizen Wealth Managment — Wed, 25 Feb 2009 13:18:27 +0000

You don’t have to be a genius to be a successful investor. Warren Buffet once said, “Success in investing doesn’t correlate with IQ once you’re above the level of 25. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.” It’s true that not everyone is Warren Buffett, but challenging yourself to avoid your own worst instincts will help you reach your financial goals.