August 2017 – Investment & Risk Analysis

August’s theme of “Investment & Risk Analysis” is going to take a “swing” at how to “approach” making our own dynamic investment philosophy. I get to talk about two of my favorite topics by taking a “birdie’s eye view” of an area that is often “double bogeyed”. Enjoy this month’s OC Wealth Coach reading!


Last month’s newsletter struck a chord with many of you and I appreciate the feedback. This month, our focus is on Investment & Risk Analysis. I am particularly interested in this topic, but it’s not for the reason that many might think. A common question I get asked when someone finds out what I do is, “So, given what’s going on with [insert geopolitical or economic event], what should I invest in?” It’s a valid question, but one that will never have a final or absolute answer because no matter how much we know about the past, we still can’t see the future. This is known as the “investor’s dilemma”. That despite tremendous amounts of money being spent on the research to discover the answer to this question, the research can only be used on historical evidence, which have no guarantees of the future.  The answer to that question would be worth A LOT of money to someone. (But, quite frankly, if it was discovered and disseminated, everyone would have the answer, which would make it worthless.)

So, rather than trying to answer that multi-billion-dollar question, let’s reframe it by asking other questions. Why are they investing? What is the money for? What are they hoping to accomplish by investing? How long are they investing? Or, if I had to summarize it with 1 simple question; “What are your goals?” Now, that’s NOT the answer they were seeking. They were looking for a quick tip, not a coaching session. And I either get a blank look or an answer like, “Well, to make some money or retire!” Rather than trying to unpack that thought process at a backyard barbecue, I like to share an analogy.

There are a lot of similarities between what we do with financial coaching and golf. The connection with investments is the golf ball. If we watch beginners swing at a golf ball, their focus is to avoid one thing: missing the golf ball and looking like a fool. They spend all of their energy making sure they make contact with the ball, and there is very little (or no) follow-through. The only thing that we CAN predict about their lumberjack-chop-esque swing is that they CAN’T predict where that ball is going to go. I mean, not even their neighbor at the range is safe. And the funny thing about that hyper focus on the golf ball is, they often still miss the ball.

An interesting turning point in my golf swing was when I stopped paying so much attention to the actual golf ball. I started to understand the theory behind making a swing that the golf ball is merely in the way of. Because if I make a swing that feels like the ball should be headed in the direction of my target (or my goal), I’ve vastly increased my chances at success. If don’t like how the ball travels, then I *may* have to adjust my swing or my thought process, but it probably wasn’t the golf ball. (Assuming we utilize some sort of framework for the golf ball and that it’s not, for example, a rock that looks like a golf ball.) And if I’m taking swings at the golf ball without first figuring out where I’m aiming, how would I even know I’m making the right swing or even holding the right club?! Lastly, if I never visualize the target or goal, how would I know if my swing was successful?

Now, after making a good swing and the ball is in flight, all we can do is take a deep breath and cross our fingers that it doesn’t make a splash in the lake.  Investments can be very similar. Some investments don’t go as planned because there’s risk. But when we get too focused on controlling what we want investments to do, we can make lousy financial swings. If our swing is in sync, our ball/investment path should be a product of a generally good swing.  However, you can have a good swing and still end up with a double bogey, because events happen we can’t account for. But, repeated attempts of good swings usually mean more consistency. More consistency usually means better golf and, generally, better outcomes over a long period of time.

So, given what’s going on with [insert target you are trying to get close to], what should you invest in? This month, I’d like to encourage you to really give some thought to your goals.  What would you like to accomplish with your money? Do you have an idea of what kind of “swing” you need to make to accomplish that goal? Are you presently making “swings” that feel like they should get you there? Do you need to alter your swing, or perhaps your goals, to be able to have a better chance at success?

I’ll bet you never thought an article with “risk analysis” in it would result in some golf coaching as well, but there you have it. Hit the links with renewed vision, and maybe it’ll help you keep it out of the long stuff.

Catch ya’ at the turn,

(The opinions expressed in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Investing involves risk including loss of principal.)

Trent Huston
Wealth Coach
California Insurance License #0G24740

17742 Irvine Blvd #200 | Tustin | CA | 92780
p |  714.832.6763
f  |  714.731.9230

Trent Huston is a Financial Consultant with securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through AK Financial Group, a registered investment advisor. AK Financial Group and OC Wealth Coach are separate entities from LPL Financial.

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