Improving Investor Behavior: 45 years, 20 lessons

A few weeks ago, I had the privilege of attending the retirement party of a long-time friend with whom I had shared almost five decades of professional journey. We had both started our careers as young financial advisors and over time, we ventured into independent businesses simultaneously. As I reflected on his retirement, I felt a deep sense of gratitude for the opportunities and lessons I have encountered over the past forty years.

My career goal, then and now, has always been to help people achieve various freedoms in their lives – freedom of time, work, relationships, and purpose. This focus on freedom has led me to learn valuable lessons which I would like to share to help improve investor behavior based on my four and a half decades of working with clients.

1. Simplicity beats complexity.
2. Time in beats timing.
3. Pay no attention to what legendary investors or billionaires think about the economy or markets.
4. Self-control will make you more money than any other trait as an investor.
5. Expect temporary, sharp declines in your portfolio.
6. Your goals are more important than the market’s outlook.
7. Risk management is important but you must take risks to receive gain.
8. Process is more important than outcome.
9. A good, solid strategy that you can stick to is better than a great strategy you can’t maintain.
10. Forecasting is an illusion of knowledge.
11. It’s easier to explain than it is to predict.
12. Know what to avoid.
13. Develop habits around what works for you.
14. Markets are right over the long run, not necessarily the short term.
15. Every investor has blind spots.
16. Wise investment advice is ignored during market excesses.
17. Understanding the difference between price and value is essential.
18. Optimists are better investors than pessimists.
19. Doing nothing with your portfolio is often the best decision.
20. Building wealth takes time.

These lessons have helped me personally and I hope they will resonate with you and help you achieve your goal of improving your investor behavior and investment success. Steve Booren is the founder of Prosperion Financial Advisors in Greenwood Village. He is the author of “Blind Spots: The Mental Mistakes Investors Make” and “Intelligent Investing: Your Guide to a Growing Retirement Income.” He was named by Forbes as a 2021 Best-in-State Wealth Advisor, and a Barron’s 2021 Top Advisor by State. This column is not intended to provide specific investment advice or recommendations.