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Overwhelmed by debt? Want to make investing a breeze? The goal of this site is to help you get out of debt and start investing for your future. If you are unsure where to start, click here to begin. I will break everything down for you in small, obtainable steps so that you can take control of your finances once and for all.

How Instant Gratification Has Killed The Stock Market

instant gratificationAs technology has made things quicker and faster, we have become conditioned to want things now. Twitter is a perfect example of this as are the 24-hour news channels. With Twitter, news breaks instantly and goes viral. The problem with this is that there is no fact checking. Just look at all of the tweets about dead celebrities that go around.

With the 24-hour news channels, it’s the same thing. The moment something happens, a reporter needs to be on the scene and people need to be interviewed. This causes two problems:

  • First, you have people that speculate on what happened/is happening. When the truth of what happened comes out, conspiracy theorists go to town, citing the original reports, which were never fact-checked in the first place.
  • Second, you have the news channels trying to find experts to talk at length about situations. Many times, the channel is so desperate for experts, they don’t do any background check on the person on the phone. Many times, like in the case of the “OJ Chase” it ends up being a person from The Howard Stern Show.

The Need For Instant Gratification Is Everywhere

There is no place that is safe from the desire of instant gratification. If traffic isn’t moving, we get mad, needing to know why we are stuck. If the car in front of us isn’t moving fast enough, we have to get as close as possible to show them they are driving too slowly. If we call up a customer service line, we get mad when we are put on hold. Heck, it’s healthy to lose up to two pounds per week yet if we haven’t shed 35 pounds by the weekend, the diet obviously doesn’t work.

I could go on and on about weight loss too. Workout DVDs are getting shorter and shorter. Did you know you can get six pack abs at your desk by using your stapler two minutes a day? Just tighten your core as you staple those papers and you’ll be a fitness magazine cover model in about a week!

Even the stock market is not immune to instant gratification.

Stocks And Instant Gratification

We all need to get rich quick. I browse investment forums regularly and always see posts by new comers asking what to invest in to make $100,000 quickly. I tell them to take $50,000 and fold it in half (I can’t take credit for that joke, I heard it somewhere).

Many investors feel this way. They will look at the prior year returns and invest in the mutual fund that returned the most last year. When they don’t see their money quadruple by the end of the week, they call the fund a dog and jump to the next fund on the list. They are committing the biggest financial sin: not investing for the long-term.

The problem isn’t only with investors either. It’s with the companies whose stocks are traded as well. The Board of Directors and stock analysts want to know if the company is going to hit its quarterly target. If it doesn’t, the stock drops and the CEO gets fired. I’m no expert, but it takes time to turn things around in the business world, much longer than just three months. Plus, there are things you cannot control.

Imagine being the CEO of a clothing retailer right now. The temperature on the East coast has been below normal for most of 2015 so far. If this trend continues and it stays cold well into the spring, imagine trying to sell shorts and polo shirts! Not making any sales means you are going to miss your quarterly estimates. Better start networking for your next job now!

Focusing On The Long-Term

What Boards of Directors and CEOs should be focusing on is the long-term. There is no point in making patches to a foundation so you hit your quarterly goal and get the $10 million stock option. You should be focused on making decisions that will bulletproof your business so that when times change, you can embrace that change and change with them. But they don’t because they are only interested in the moment. Instead of a long-term plan for success, they are forced to adopt a 90 day plan because that is when they need to report earnings again.

It wasn’t always like this. Back in the day, companies looked at the long-term, as did investors. It was common for an investor to buy shares of General Electric and hold it for 20 years or more, collecting nice dividends along the way. But not anymore. The second bad news hits, investors run as fast as their legs will go.

Here is why individual investors need to focus on the long-term. By focusing on the short-term, you are guaranteeing yourself a 2% annual return. That doesn’t even beat out inflation! When you focus on the long-term, you ignore the hype that others, including the news and Wall Street, are trying to get you to act on. Once your emotions enter into your investments, you are guaranteed to lose. If focusing on the long-term is hard for you, consider an automated investing service.

There are a few other tips, along with focusing on the long-term to improve your odds at investment success:

Be Conscious of Costs: the lower the expense ratio you pay for your investments, the more of your money that stays invested in the stock market, allowing for compound growth. The easiest way to see how much you are paying in fees is to sign up with Personal Capital and use their 401k and Portfolio Fee Analyzer. They are like, but more geared toward investments. It’s 100% free and allows you to see all of your investment accounts in once place.

Diversify: One sector may be “hot” today, but chances are it will be cold next week. You don’t know what is going to perform well and what isn’t. Just look at these charts for proof. Your best option is to create a well-diversified portfolio and stay invested. Need help creating your portfolio? Check out my post on model portfolios.

Have A Plan: If you don’t know where you are going, how will you ever get there? The first step to investing success is having a plan. This plan will help keep you on track for the long-term so that you don’t let your emotions suck you into a bad decision. When you do get emotionally, you can refer back to your plan to help keep things in perspective.

Final Thoughts

The bottom line is you have to stop looking at the short-term when it comes to investing and embrace the long-term. While CEOs will continue to focus on hitting their short-term estimates, you need to learn to tune out this volatility and look long-term so that you can grow your savings. Learn to see the short-term dips as buying opportunities and nothing more.

Remember, the long-term trend of the stock market is positive. With more people focusing on the short-term, there will be more bumps along the way. But if you can look past this, you can be a successful investor.

If you want a guided path to investing success, pick up my book, 7 Investing Steps That Will Make You Wealthy. It’s only $10 and is a quick read that is packed with all of the information you need to know to be a successful investor. It contains the tips and strategies that great investors like Warren Buffett use to be successful investors.

How To Save $100,000

If you’ve ever read Pete Briger's bio, you may be wondering how you can win at the financial game, too. Here’s how to make the necessary changes so that you can save your first $100,000. Sacrifices now can mean big savings for the future. 5 Tips To Saving $100,000 Reduce Your Debt It’s tempting to buy a new car, get a huge home, or treat yourself to a brand new home theater system. However, if you have to use credit to get any of those things, it could take you years to pay off both the loan and the interest. Your first step to saving money should be reducing your … [Read the full article]

Take Big Risks With A Little Bit Of Your Money

My Asset Allocation

This isn’t advice you typically see, but this is a personal maxim that has helped me get more enjoyment and energy out of my investment life. I spent a lot of time in my early investment years thinking about my risk tolerance. I decided that I was fairly open to risk. I had a 95% stock/5% bond allocation in my IRA for many years. But as I’ve gotten a little older, I’ve lessened the amount of risk I’m willing to take on, currently I am at an 80% stock/20% bond allocation. (You can learn the importance of having a good asset allocation in this recent post.) After all, … [Read the full article]

Strategy vs Luck: Which Is The Better Investment Approach?

Periodic Table of Investments

When the stock market is “hot”, everyone is an expert telling you where you should invest your money, and when the stock market turns south, everyone is an expert as well, telling you why to get out. (Of course, very few of these "experts" have IMCA’s CIMA designation, certifying them to manage investments.)  They tell you where you should invest your money, or even if you should be pulling everything out of the market. The interesting thing about this is that the average investor only earns about 2% per year whereas the market earns roughly 8%. The question is, if all … [Read the full article]

The State of Savings In The United States

Americans Saving Rate

Bankrate came out with an updated study on the amount of money Americans are savings. The good news is that there are some Americans that are doing well with saving their money. The bad news is that way too many of us are still lacking in the money saving department. How do you overcome this is you are in the non-saving category? I will walk you through some of my tricks that help me to save. Hopefully, you can use them to your advantage as well. Saving 15% Of Your Income The study found that middle-class earners were the best at saving 15% or more of their income. … [Read the full article]

Selling Your Home At Auction: Valuable Advice Anyone Can Use

selling your home at auction

An auction house environment can be an exciting environment and has the potential to be rewarding for those that know how the system works and when to raise their hand, but if you are new to the process, it can seem quite daunting and even a bit confusing. If you have every asked the question and wondered whether I should consider selling my house at auction? Here is a look at some of the points and rules of the game that you should know about. Auctions Are For Everyone The most salient point to make about buying and selling property at auction, is that auctions … [Read the full article]

My Personal Capital Review: Is This The Answer For Investors?

personal capital

I’m sure by now many of you have heard of Personal Capital. If you haven’t, then good news, you are about to learn everything you ever wanted to know about them! But before we jump in and start talking in-depth about Personal Capital and why it is so great, I need to explain to you why I am even writing about them in the first place. Searching For Answers I’ll admit it, I’m a finance nerd. Anything related to the stock market gets my attention immediately. When I was living with my best friend, we would watch Fox News Channel on Saturday mornings because of all of … [Read the full article]

Better Investing Strategy: Buy And Hold Or Active Trading?

better investing strategy

When it comes to investing, there are two main approaches: buy and hold or actively trade. In this post I am going to compare the two options in various categories to see which one comes out ahead as the better investing strategy. As longtime readers know, I am all about buying and holding for the long-term. However, I will put my beliefs aside and look at the two strategies as unbiased as possible. Let’s get started. Better Investing Strategy Rules Before I start comparing the two strategies, let’s get the ground rules set up. First we have to define what both buy … [Read the full article]

History of Cyber Warfare Infographic

I'm an electronics and tech geek. This shouldn't surprise too many readers since electronics were one of the ways I got myself into credit card troubles about 15 years ago. I was sucked into the news stories about hackers and Sony Pictures movie The Interview last year. The whole story was amazing and even more so was the success of the film even though it was only released in digital platforms (basically straight to DVD). Most times when you hear of a movie going straight to DVD, it is one to pass on. It's the 3rd sequel to a decent first movie, but the main … [Read the full article]