Can Fly Fishing Teach Us Something About Investing
Here is a way to capture a little extra performance in your investment portfolio. Sorry, this is not a hot stock tip, but a behavior you can adopt to enhance your investment returns over time. Behold the power of observation. If you sit back and observe, our daily lives reveal valuable lessons that we can apply to our investment behavior. Here is an example.
As a Fly Fisherman, I have experienced many life lessons out on the river. As a novice, you are immediately focused on your casting and how to throw the perfect loop. It is all about the show. As your skills progress, you become obsessed with the perfect drift. That is making your fly float with the current leaving no indication that it is attached to a human being on the other end. Making a perfect drag free presentation is an essential skill for any Fly Fisherman, but it does you no good if you spook the fish first while getting to your casting spot. Had you waited until the light was lower on the water, you may not have spooked the fish.
A True Expert Displays the Ultimate in Patient Behavior
A true expert displays the ultimate in patient behavior. You have arrived as a seasoned angler, when as a matter of practice you stop and observe the water carefully before you hit the bank and implement a tactical approach designed to fool a Wild Trout. How you stop and read the water sometimes a good distance from the bank can mean the difference between success and failure as a Trout Fisherman. Careful observation and patience before you attack a section of river will pay huge dividends over time and put more fish on the bank. This same behavioral approach can benefit your investment program as well.
Patience, Prudence, and Careful Observation before you invest is key
If you wait and observe, often times the market will reveal clear desirable entry points. Don’t be in a hurry to make a cast (investment) in your portfolio without first carefully observing the overall market conditions. Dollar cost averaging is an important principle, but be careful not to exclusively use hard scheduled dates without also taking into consideration the macro environment. Be patient.
As an Advisor, I let my clients know that I am going to take my time investing their portfolios. These days, it is not uncommon to see the market fluctuate 1 or 2% in a week. Don’t be in a hurry. Look for big dips and pullbacks before you add or raise cash. Traditional scheduled Dollar Cost Averaging can be effective, but don’t be shy about keeping some extra cash on hand for those easy market entry points. Good Luck!