“May you live in interesting times:” indeed. We’ve seen European defaults, the debt limit debacle, the subsequent AA+ downgrade, earthquakes in Colorado and Virginia and Hurricane Irene. I don’t care if Wikipedia says the “Chinese Curse” isn’t actually Chinese. It’s still a “curse” nonetheless.The best part of writing (and hopefully reading for you) a financial column for a monthly publication is that it lets us remind ourselves of the difference between investing and trading. Advice on investing should survive the time between a column’s deadline and when the paper hits the stands. Indeed, readers should be able to visit newfalconherald.com a year from now and still gain useful insight from what we talk about today.We can’t say the same about trading. For a trader, what works today as I write this won’t still be the case next week, or possibly even tomorrow. A trader would say you can’t possibly write a column before any Jackson Hole Fed announcement or before Hurricane Irene even gets out of the Bahamas – knowing that it won’t get published until afterward and will continue to be the on-the-stands edition for a further month.So here’s the question for you, dear reader: Between now and through retirement, how many New Falcon Heralds will be published? How many more hurricanes will there be? How many currency and debt crises will the world face? Even if you’re retiring tomorrow, the answer is probably (and hopefully!) “a lot.”Therefore, leave the trading to the stressed out professionals who are forced to watch the markets, CNBC and the Weather Channel continuously. Be an investor. Be an owner. Be a mature and perhaps wise adult who knows that the stock du jour is like a plastic toy on a holiday morning – something that kids get too excited about at first and will either break on heavy use or be discarded for the next cool thing.However, investors know that fundamentals do change. But perhaps at a slower pace than CNBC would have you believe. Changes need to be made in our world view if our view of the world requires it. Take for example the opposing forces in the market between the S&P’s downgrade and the Fed’s insistence on lower rates. If your long-term investment plan included a large amount of U.S. Treasury bond funds, now is probably the time to take some or all of the gains off the table. No one with a long-term financial goal will make it at 2 percent interest during 31/2 percent inflation. You’re going backwards.On the other hand, some things don’t change. Regardless of a continuing recession or some kind of worst-case-scenario “collapse,” stocks will continue to represent ownership in a business. If the business is able to continue, then the stock will continue to have value.And then things that we never thought would change suddenly do. The U.S. dollar had an unusual and very good (for us) position over the last several decades.Changes in the international economy and the Federal Reserve that continue to keep interest rates low by buying up assets in exchange for printed money is fundamentally changing how the world does business. But just because you live in the United States doesn’t mean you have to ride the dollar down like Slim Pickens in Doctor Strangelove. Here we see the difference between traders and investors again. An investor will gradually move some money from U.S. stock funds into diversified, non-currency hedged international funds. A trader will jump into one currency or region based on a short-term news story. An investor will adjust her portfolio for inflation and currency risk by making sure that she has some of her assets in companies that mine precious metals and produce commodities. A trader will try to time the gold market.Having the same values as an investor as you did 10 years or 10 months ago does not mean having the same investments as you did then. It means selecting investments you would be comfortable having through the next set of earthquakes, hurricanes and political crises. But it still means being just flexible enough to recognize and act when the fundamentals change.Jason Gray owns GoalView Advisors, a Registered Investment Advisory firm in Falcon. He is a Falcon resident and serves as chairman of the board for the Eastern Plains Chamber of Commerce. He can be reached at 719-439-2054 or jason.gray@goalviewadvisors.com.
