Today, I will discuss developing an objective sounding board: It’s important to establish a process for consulting an unbiased, knowledgeable person, or group of people, ideally outside your social circle to minimize groupthink, in order for you to bounce ideas off and challenge your investment thesis. This can be a financial advisor or any third party who isn’t afraid to play devil’s advocate. Simply discussing your investments before executing them will help minimize emotional decisions and the financially devastating consequences that come along with those decisions.
I can’t tell you how many times clients wanted to make emotional decisions regarding their portfolio. This comes up frequently as it relates to politics where investors become emotionally charged about a particular candidate and if that candidate loses, they want to readjust or liquidate your portfolio. Usually a conversation with me has been enough to save these clients from derailing their financial lives.