Michael Vick's Lesson To Investors

Michael Vick’s Expectations Were At The Root Of His Problems, Are Yours At The Root Your Investment Upsets?

You can hardly go a minute these days without hearing about the remarkable transformation of the Philadelphia Eagle’s Michael Vick. From the coach on down you hear about how Michael Vick has made remarkable strides in his quarterback play. In less than three games this year Vick went from backup to starter. In a moment of candor, Vick admits that athletically his skills aren’t what they were as a younger quarterback playing for the Atlanta Falcons.

Vick admitted that as a younger quarterback he didn’t study for upcoming games or hone his quarterbacking skills as diligently as he is now. He said that he believed that he was skilled enough to get by with his legs and ability to make plays. At the time he couldn’t see his expectations  were hindering his and his team’s ability to win games and championships. Bad play, an arrest, and the squandering of a huge NFL contract are of themselves huge problems. The real problem for Michael Vick and what could be the biggest most serious problem for investors are hidden expectations that border somewhere between unrealistic to delusional.  They lead to self inflicted sabotage. 

Lots of times investors experience upsets. Investors get upset when their portfolios don’t perform as they believe they should. They get upset when their portfolios lose a lot more money. They get upset when their fund manager is being outperformed by all their friends’ fund managers. Unfortunately, when in that much of an emotional state the investor can’t see the damage they are likely to do (Sell Low/Buy High). The impact of upset based decisions won't be felt until far into the future when we realize our portfolios haven't produced the returns we needed. Today the investor’s focus is on getting rid of the upset. We never focus on the role our expectations have on our upsets. We don’t look at how realistic or unrealistic they might be, nor do we take the time to see where our expectations came from.

Now, we will not be able to be responsible for or eliminate the damage our expectations are doing until they are fully accounted for.  So our goal today is to see as an investor how realistic, unrealistic, or maybe even delusional your expectations are. Take the Realistic Investor Quiz below being completely honest with yourself:

When it comes to investing my expectations are:

1.       Long-term means five to ten years.

True                       False

2.       For me or my broker to make frequent changes to my portfolio base on current market activity.

True                       False

3.       Investments that have performed well in the past to continue to produce superior rates of return.

True                       False

4.       To outperform the returns generated by my friends, family members, and business colleagues investments generate.

True                       False

5.       That logic and rational thought to be the determining factor in my investment decisions.

True                       False

6.       That the information generated by television, the magazines, internet, etc. will be designed to ensure that I make sound investment decisions.

True                       False

7.       To consistently generate above market returns.

True                       False

8.       That my financial professional will effectively predict economic and market changes.

True                       False

9.       That more risk always equals higher returns.

True                       False

10.   To worry and fret about my portfolio, especially when the market drops or returns are too low

True                       False

Score Yourself

0 True: You’re a realistic investor

1-5 True: You’re an unrealistic investor

6-10 True: You’re a deluded investor.

Now start dealing with the unrealistic and delusional expectations and you will be a more peaceful and successful investor. Like Mike Vick people will take notice.

Brendan Magee is the founder and president of Inevitable Wealth Coaching. With questions, comments, or suggestions call 610-446-4322 or e-mail Brendan@coachgee.com.