How do you avoid letting emotions into your investing strategy?
Keeping emotion out of investing is easier said than done, even for Ultra-High Net Worth investors. In some cases, the extraordinary wealth they have accumulated can make them feel even more responsibility for preserving their funds and protecting their legacy. A steady hand and a reasoned approach to investing is a tenant we live by at Weber Global Management, providing our clients with calm and forward-thinking strategy that’s designed to weather the inevitable volatility of the market and our world. Here are some of the ways we keep emotion out of your investment strategy.
Top Tips For Removing Emotion From Investing
1. Run Your Own Race
Every investor has a unique set of circumstances and this is even more true when it applies to Ultra-High Net Worth investors. UHNW investors typically do not have a simple portfolio; their wealth has, in some cases, existed for generations and can consist of a broad range of assets. The portfolios of two UHNW investors can, and often do, look nothing alike. So there’s really nothing to be gained by comparing or emulating others and, in fact, trying to apply a standardized approach or proprietary products to a highly unique investor is, at best, leaving opportunity on the table and, at worst, risky.
Our approach is, and has always been, to comprehensively and exhaustively understand what makes each of our clients unique and to create a highly-personalized financial strategy that takes into consideration their full picture.
2. Delegate
UHNW are, by and large, incredibly skilled, intelligent and discerning personalities. They didn’t accumulate their wealth by handing over responsibility to other people and can often be a bit wary of relinquishing control. We strongly believe that when it comes to financial strategy, it’s important to delegate to a trusted, proven resource.
At Weber Global Management, we have spent our careers learning every nuance of sectors that others don’t even consider, providing a deep knowledge base as we’ve built enormous wealth for our clients and ourselves. Developing a trusting relationship with a global powerhouse lets you leverage their expertise for your needs, and relieving concern and worry that may lead you to make emotional decisions.
3. Accepting What You Can’t Control
Markets are, by their very nature, changeable and, to some extent, unpredictable. That said, if you have perspective and a reasoned approach to your financial strategy, you’ll feel confident in your ability to weather downturns and challenges. An example: despite the headlines, the DOW, S&P and Russell have barely budged since the summer of 2018. If you made a micro-adjustment (or, worse, pulled out of the market entirely) due to one of the big swings along the way, you’d be reacting to a single data point and not the broader picture.
Staying the course in volatility is often the best course of action, but it’s easier in theory than practice for most investors. Your Ultra-High Net Worth wealth manager can remove emotion by helping you execute on a reasoned, rational plan that is designed to flex with a market that’s in flux.
4. Be Honest With Yourself About Your Tolerance For Risk
In some cases, the big swings you take will pay off and, in hindsight, investing is simple. In reality, not everyone can sleep soundly at night with the same balance of risk in their portfolios. Sometimes that concern is real, but sometimes it’s just a lack of understanding of the bigger picture and buy-in to your broader approach. When you work with an Ultra-High Net Worth wealth manager like Weber Global Management, they should take the time to comprehensively understand your risk tolerance, your goals, your timeline, what drives you — and what scares you, too. This information will become the foundation of a plan that will paint a clear picture for you, letting you feel comfortable and secure in the risk involved.
5. Don’t Fall In Love
Or, at least, be willing to accept you might get your heart broken. Many UHNW investors have built their fortune in specific sectors that have done well for them. That doesn’t mean they always will. We have sectors and companies we have invested in for years, but, when we see the writing on the wall, we take action. It can be hard to separate yourself from a history of investing in a particular way, but it’s critical that you maintain a level of emotional distance from these entities. The truth is: they won’t love you back.
Just as it is critical to not make rash, emotional decisions in an uncertain time in the market, you don’t want to stick with a losing asset past its time, either. Determining when and how to make a change is something that your UHNW wealth manager can handle for you, keeping you ahead of the game and with your emotions in check.
We are always here for our clients.
At Weber Global Management, we are committed to our clients not just as their wealth managers, but in understanding them as unique individuals with families, goals and legacies. They have entrusted us with their fortunes and, in return, we are able to provide them with the reassurance and security that comes with knowing we are advocating on their behalf in the markets, with a sound strategy behind everything we do, removing emotion from the equation.