YOM KIPPUR: TIME TO ATONE FOR INVESTING SINS
If history repeats itself, and the unexpected always happens, how incapable must Man be of learning from experience.
– George Bernard Shaw
Boy, how the times flies. While it seems like just yesterday that we were preparing for last Yom Kippur, here we are again about to enter the most holy day of the Jewish year. Once again we are preoccupied with seeking forgiveness for this past year’s sins, as well as planning to improve ourselves in the upcoming year. Be a better spouse, give more charity and visit the sick are just some of the goals that we set for ourselves to become better individuals.We focus our self-improvement not just on what we can do better in the upcoming year, but also by looking back and understanding where we fell short of our goals. In today’s fast-paced, live-for-the-moment culture, taking time out to reflect on the past and thoughtfully plan for the future may not be trendy, but it’s the only way to truly improve.
Rabbi Abraham J. Twerski brings a great example to illustrate this point: “Is it coincidence that our generation is infatuated with digital watches and clocks? Old-fashioned timepieces told time by a pointer, which had the past behind it and the future in front of it. These timepieces symbolized an awareness of both, but a digital display focuses exclusively on the present moment and gives no recognition to the existence of either the past or the future. While we should not allow the burdens of the past nor the anxieties of the future to exert a destructive effect on our living, the constructive lessons of the past and a responsible attitude towards the future can guide us to a proper and responsible life.”As we tend to spend most of our time preparing ourselves spiritually for Yom Kippur, now is a perfect time to use many of these same principles to get our finances in order as well.
Don’t think that reviewing the past is for spiritual improvement only. Taking the time to review your investment “sins” of the last year and atone for them is a surefire way to get yourself back on the path to financial stability.
Hot stocks?
The culture of instant gratification is also played out in the arena of investing. Turn on the TV, check your email inbox, or even go to a synagogue kiddush, and you are likely to hear about “hot stocks” that will make you rich in a very short time. Who needs to own a stock that increased by 8 percent in value and pays a nice dividend when you can own the next Google or Apple? What inevitably happens is that investors tend to quickly buy a “hot tip” only to then sell it as soon as the next “tip” comes along that they must buy.
In investing, the way to make money over the long run is by sticking to a strategy. Isn’t it strange that with all the transparency to be able to see exactly what top investors are buying and selling, and even read why they are making the moves that they are, that investors who try and copy them are unsuccessful? Two university research papers on the subject both came to the same conclusion: Investors lack the discipline to exactly follow what the “top investors” are doing. They start interjecting their own analysis into the equation, don’t buy or sell all the same stocks and ultimately underperform the market.
No goals investors need to look forward as well. You need to define your goals. Whether you invest to fund your retirement, to pay for children’s’ weddings, to leave an inheritance for the next generation, or a combination of these, understand your goals and invest with those goals in mind. Due to the emphasis placed on it by the financial media, investors often pay too much attention to performance and too little attention to why they are investing.
If you need your money in a year or two to pay for a wedding, you may have to accept getting a small, guaranteed return on your investment as opposed to “trying to beat the stock market.” Stock-market gyrations and returns are almost irrelevant to an investment portfolio for which you only have a short-term horizon and where principal protection is the ultimate goal. If you understand your goals and you invest with an eye on meeting them, your chances of success will be much greater.
May we merit a happy and healthy New Year. Shana tova.
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates.
Aaron Katsman is author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing (McGraw-Hill), and is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. (www.prginc.net). Member FINRA, SIPC, MSRB, SIFMA. For more information, visit www.aaronkatsman.com, www.gpsinvestor.com or email aaron@lighthousecapital.co.il.
