Investor Independence Day

I wrote an article about Cinco de Mayo that needed a little dusting off and editing. What follows is a new and improved version in of the day! Cinco de Mayo (May 5th) is the day that marks the victory of the Mexican Army over the French at the Battle of Puebla. The "Batalla de Puebla" came to represent a symbol of Mexican unity and patriotism. With this victory, Mexico demonstrated to the world that Mexico and all of Latin America were willing to defend themselves of any foreign intervention. As a result, Cinco de Mayo is now seen as a symbol of independence.

In the spirit of the day, it’s time for investors to mark their own independence day---independence from the industry’s hype, from unrealistic expectations and from the emotions that often doom a financial plan.

Let’s start with the hype. I was at a luncheon on Friday and those who were “insiders” in the financial services industry seemed far more upbeat than the others attending the event. It seems that the mainstream media is rolling out a constant drumbeat of negativity, which is affecting how people feel. The funny part is that much of the bad news that was keeping financial folks awake at night seems to have passed. While we all acknowledged that it may not be smooth sailing, the general consensus was summed up by a 30-year veteran of portfolio management: “I have to say that I feel better today than I have in a year!”

Here’s the take-away: when the media is doing stories on flipping houses, a soaring stock market and is full of hope, file that information away into your “hype” folder. Conversely, when there appears to be only dour news on the airwaves or in print, feel free to file it into the same place. As I have said time and time again: It is rarely as good or bad as you think it is. And don’t forget, the American economy is resilient and has gone through booms and busts before. Be strong and try to sort out the noise.

Investor independence may hinge on the ability to filter information and use it to your advantage. As we all know, often the biggest enemy in achieving your financial goals stares at you in the mirror every day. Reacting emotionally when you manage your finances may lead you to a decision that is not in your best interest. To reduce the chances of making an emotional decision, turn down the noise and stick to your game plan.

If you can do that, you surely will have something to celebrate today---investor independence -- Margaritas for all!