Body Surfing the Market

By Pete McKenna

There is a great feeling of exhilaration as you catch a wave body surfing at the shore.  Your arms and face out-stretched in front of you as you ride atop the wave, riding its power towards the shoreline.  You emerge, stand up, a wild grin upon your face and you paddle out to catch the next one.  But herein lies the issue.  Where is the next wave, and will you catch it just as perfectly?

Will you experience that joy again, or be left treading water as the wave moves on without you but with others atop it?  Will you be ridden by the wave, which feels much the same until you hit bottom and then you’re spitting out sand and grimacing at abrasions, or worse? 

Trading the financial markets can be a similar experience.  You can find joy, exhilaration, bravado, but you can also feel pain, despair and a view that you have missed yet another wave.  Investing is different, it takes a longer view, it studies the markets and the companies in it, and attempts to harness its power for your benefit.  While trading focuses on the waves, investing focuses on the tides.  The waves come and go without predictability, but every six hours or so, one tide ends and another begins its inexorable rise or fall. 

Are you an investor or a trader?  An investor has specific, quantifiable objectives and their portfolio is aligned with those goals.  A trader is betting on a wave and their portfolio is aligned with that objective.  If your portfolio is geared towards a long term objective, the wave is just a rise and fall on your path through tidal waters.  If you are a trader, the wave is all there is.  The crest of a wave at low tide can feel higher than the trough of a wave at high tide, but without an objective measure can you really tell? 

Take the long-term view, invest for the long-haul, focus on fees, use an advisor that puts your interests ahead of their own and puts it in writing.  A trusted advisor is someone that can help you define your goals and objectives, help you identify the risks you face and guard against them.  A trusted advisor doesn’t have a bias towards any particular investment or product, they have a bias for you. 

The author can be reached at peter@highlandplanning.com