Wall Street forever produces new products. They come out with fancy and appealing names that are specifically aimed at grabbing your attention. The marketers are working on overdrive to “frame” those products as “investor friendly”. The key is that they don’t overtly say they are “investor friendly”. They imply through their marketing efforts, such as their name, that they are. I often wonder how many investors read the “fine print” regarding the risk factors inherent in those investments. My guess is – not many.
Every investment has pluses and minus, so it is incumbent upon the investor to do their own diligence. Pure vanilla investments such as run of the mill stocks and bonds have so many characteristics to learn about. That is enough to learn for most investors. They don’t need to get involved with “fancy footwork”.
The types of investments with sexy or loveable names appear innocuous on the surface, but if you dig down, you would be surprised at their potential downsides. Many investors unfortunately find out too late about the extreme risks of their holdings when the downsides “rear their ugly face”. They may be rolling along making good returns unaware of the potential downsides until that fateful day.
So keep your investments and strategy simple. Fend off the “sirens song’ of fancy footwork. You can be very successful with just doing the fundamentals well. There will always be that appeal to “buy that elixir that will make you wildly successful”, but don’t buy in to it. It is as appealing as daydreaming that you will win some fantastic sum in the lottery – possible but very improbable.
The best athletes in all sports are excellent at performing the fundamentals well. While they can perform some pretty awesome feats, they only can do so because their fundamentals are rock sold. Investments are no different.
Keep it simple and you will be very successful!
