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Stock Trader or Investor?

When I tell people I am a financial planner and financial advisor, the usual come back is, “Oh, you are a stock broker.” Actually, I have not bought or sold an individual stock for a client in years. I do invest their money in stocks through managed portfolios. Clients want what is right for their individual needs.The market doesn’t care about your investment know-how – good or bad. Over the long term, those who make good, sound decisions ensure they are taking advantage of market discrepancies, which also is defined as “crowd mentality,” or “let’s watch the lemmings go over the cliff,” mentality. A bad decision may make money for you once. A string of bad decisions has little or no chance of being profitable.Sometimes one can observe this phenomenon by looking at the volume of any stock as it nears the bottom of its chart, shaking out the diehards who were sure their stock was absolutely, without a doubt going to go back up tomorrow or next week.There are also people who “chase returns.” Here’s an example of a conversation: “Yes, the XYZ stock did do well last year, but that was last year. I understand that you want to get in to the stock, but it is high priced and no longer in a favorable sector of the market. But if you still want to buy that stock, here are the disclosures you need to sign saying that we have discussed the volatility of the market, and I have informed you that this is not a suitable choice, with all that you have said about your goals and current financial situation.”They are excited about buying a security at a high price! As always, past returns do not guarantee future results.It is human to defend what we own. When Enron was coming apart at the seams, some shareholders were defending the company because they owned the stock, not because they actually looked at the company!How does this all tie together? By using money managers, the emotion is simply taken out of the equation. Financial planners who use money managers act as a buffer between their clients and the market. They also make available resources by using money managers and portfolio managers that might otherwise not be available to the public.The best thing you can do is to find an experienced advisor whom you are comfortable with and talk to them about your financial life, your goals and aspirations. When you are comfortable with the person you choose, continue to work with them on those other items that have not been moved off the back burner. Your advisor should be well connected with attorneys and accountants who can take care of your legal and accounting needs.Donnell Services, LLC719-886-3377Registered RepresentativeSecurities America, Inc.Member NASD, SIPCFor more information, visit www.alexdonnell1.sarep.comDonnell Services, LLC and Securities America, Inc. are independent companies.

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