Why Investing With Integrity Is So Important

Investors Need To Be Investing With integrity

                By: Brendan Magee

Integrity is defined as, soundness of moral character, being whole, or undiminished.

I can’t think of anyone who had more integrity than Jack Lalanne, the fitness guru who passed away this week at the remarkable age of 96. He preached and lived a message of eating right and exercising.  In all the times I saw him, I never saw him stray from that lifestyle. As a result of his consistency, millions of people are living healthier and with more vitality.

Could you imagine how many people would have followed his example if it was only for show? What if at some point a video of him had been put on Youtube of him hanging out at a bar drinking a few beers and smoking cigarettes. His message would have lost all of its integrity. Thankfully though this was not the case and thousands of people have benefited from Mr. Lalanne’s message and example.

Unfortunately, many investors never have had the opportunity to fully understand what it means to invest with integrity. This isn’t to say that the majority of investors are bad people. What it means is having the opportunity to invest consistently with how you believe the world of investing works. As a result, there is a disconnect between how people believe markets work and how their money is actually being invested and suffering is abounding. As a opposed to being tired, listless and unhealthy, an investor’s suffering occurs in the form of confusion, stress, anxiety, poor performing portfolios, and the disappointment of  having to compromise on the things that people really wanted to accomplish for themselves and their family. (The shore house that can’t be purchased, The school you can’t afford to send your child to)

Now to put the integrity back in your portfolio and end the suffering is not a complicate process. There’s a choice between only two philosophies, Free Markets Work or Free Markets Fail.

Free Markets Work has a few core beliefs:

-Free Markets are setting prices accurately

-Supply and demand are the best determinants of price

-The randomness of markets (people) make it impossible for anyone or entity to accurately predict

Market prices or movements in advance without incurring more risk  

Free Markets Fail also has a few core beliefs:

-Free markets do not set prices accurately

-Some individuals or entities have the ability to know which securities or markets are overpriced or underpriced in advance.

-By identifying which markets are under or over priced investors can increase returns and avoid losses

So which philosophy would you align yourself with? Free Markets Work or Free Markets Fail? There isn’t a wrong answer here. It’s just a matter of what sings to you. However, if you’re going to have integrity as an investor, you are going to have to invest consistent with your philosophy. What that means is this:

As a Free Markets Work investor, you would want to invest as follows:

-Focus on capturing market rates of return, not out performing them

-Diversify prudently

-Measure your risk tolerance

-Eliminate all gambling and speculative practices (No stock picking, market timing, or track record investing, as these are all activities whose aim is above market rates of returns)

-Work only with a coach who shares your beliefs

As a Free Markets Fails Investor, you’d be investing under the following guidelines:

-Make use of stock picking, market timing, and track record investing, as you’d be trying to produce above market rates of return.

-Stay connected to all sources of financial information so you can act quickly to the news and events of the day

-Work with a coach who shares your philosophy.

Now the question is why is all this so important? The answer is, You can’t know who to believe until you know what it is that you believe. Imagine the stress and the lack of peace in having your life’s savings invested in or with someone who you don’t fully believe? What are the odds your money will be invested in accordance with what you’d want done with it?

So if you’re an investor who is suffering,  the cause is most likely a breakdown between an investor’s core beliefs and the strategy of how their money is being invested, and the solution is to put the integrity back in. It’s not hard to do and if you’d like my help, give me a call or send me and e-mail.

Brendan Magee is the president and founder of Inevitable Wealth Coaching in Drexel Hill, Pa. With a question, comment or suggestion, call 610-446-4322 or send an e-mail to Brendan@coachgee.com