Patience is the key to sane and successful investing

Kim Ciccarelli Kantor  |  Naples Daily News  |  October 10, 2013

Markets all over the world are interrelated and the striking resemblance of good times and bad times has in recent times become more apparent.

Confidence in investing, when markets have turned sour, is often a challenging task.  Keeping a straight head and having staying power is even more difficult.  Patience is a promising word in an uncertain time for investors.  “Patience” is something we must learn.

Consider your reaction to fluctuating and declining stock prices.

Are you a committed long-term equity investor?  If not, and you are invested in equities, then it’s time to learn just how to become committed.

If you cannot accomplish this goal, then your reactions to temporary market declines will precipitate in insane actions.  You may inadvertently lock in your losses forever.

Stock market corrections are in inevitable part of investing.  This, of course, does not make them any more pleasant an experience.

When any crisis or tragedy hits, you must keep a straight head.

This same advice applies to the market.  Adhere to the most obvious advice from experts.  Don’t run too briskly in any direction during pronounced volatility.

If you feel panicky, take a deep breath, take a walk, listen to music, pray or talk with your financial advisor.

Do not let short-term volatility deter you from staying on course with your long-term objectives.

Develop staying power.  This is especially important for retirees who take cash flow from their portfolios.  Review your income needs and expenditures.

Are you withdrawing too much from your portfolios, and if so, what adjustments would make sense?  Study options for alternate sources of cash flow.  Plan ahead 9 – 12 months and be sure you are either holding some liquid cash reserves or have immediate access to obtain them.

Review tax-planning techniques.  Perhaps there are tax advantages that can reward you and help leverage the value of your portfolio.

If you are living on dividends, your income stream may not be immediately affected; however, if you depend on the sale of equity shares, be careful.

Provided you hold your share count constant, you have the ability to earn back your principal.  Should you start liquidating stock shares at an advanced rate in a declining market, your income may be affected dramatically over the long term.

The patience of investors has been repeatedly tested over the last year in most global markets.  To live with varying markets decline, several rules must be followed:

1. Keep a straight head.

2. Develop staying power.

3. Smart money remains invested.

4. Focus on long-term goals.

5. Maintain a diversified portfolio.

6. Invest regularly in both bear and bull markets.

7. Consider tax opportunities.

8. Talk with your financial advisor.

What a wonderful world we live in and what a great opportunity we have to be shareholders of some of the best companies in the world.

The long-term fundamentals of a good business will ultimately reward its investors.  Think sanely and make sound decisions, especially in difficult times for markets or you personally.  Remember, these too shall pass.

Kim Ciccarelli Kantor, CFP® CAP™ is president and founder of Ciccarelli Advisory Services Inc., a Family Focused Wealth Management Firm in Florida and New York.