I have a couple of hours before kickoff to get this week’s blog/newsletter done. Just so you know, I froze my butt off at every Packer homegame from 1986-1990 and don’t recall ever leaving Lambeau Field happy. But I guess they’re still in my heart. Sophia says the Steelers are “mean”. We will be happy for whomever wins today but I sure hope my potroast is met with a fun game to watch.
I Hope You Ate Well:
What is simple often looks or feels complicated. Football is that way. A simple term like “First Down” can confuse anyone lacking knowledge of what it means. The term describes chance and movement. The investment world has many such terms buy they are often misunderstood or misused creating conundrums. Here’s how I view the game being played:
1) Hire an advisor/coach you can communicate comfortably with.
2) Work together to creat an accurate Investment Policy Statement. This is your gameplan.
3) Have a working scoreboard. Know how to monitor your results and make sure you are receiving quality information.
Once these things are done, it is time to play the game.
We are in the first quarter of 2011. We have been given some positive data in terms of corporate earnings, international banking policies, and expected GDP growth. But, I see a conundrum. Many of the past trading days have shown correlated movements in indices I prefer to not see correlated. I often think it is due to the “misunderstood” terminology. For example, many of the talking heads on news channels have shared a positive outlook for industrial companies the past few weeks. The Dow Jones Industrial Average (DJIA) has risen nicely during this same time. How many people know that investing in the DJIA is a far cry from investing in industrial companies?
The DJIA includes: Bank of America, American Express, JP Morgan Chase, and The Travelers (and 26 more some of which really are industrial firms).
Industrial companies: General Electric, United Technologies, Caterpillar, 3M, Emerson, Honeywell, Cummins, Union Pacific.
There is a significant difference.
The terms matter.
Your understanding of them matters even more.
Until next week,
Susan R. Linkous