Wedding Planning and Investing

Wedding Planning and Investing

All Is Not Lost That Is In Peril

Stock Market Analysis Video

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This weekend probably isn’t particularly significant for most people, but for me, it marks two months until my wedding day. In the last year of planning, I’ve learned some valuable lessons that also apply to investing and I’ll share them with you today. So without further ado …

1.) Decide on a budget and asset allocation. The first thing you need to do when you start planning a wedding is come up with a budget. Once you determine the total amount you’ll spend, you need to figure out where to allocate it. What’s most important to you? Gourmet food or a big photography package? A designer wedding dress or exotic flowers? You probably can’t afford it all, so prioritizing which things are most important can help you decide where to spend the majority of your money.

The same is true in investing. Many investors have portfolios that contain several different types of investments. Once you decide how much money you’re going to invest, you need to decide where to put it. You might consider yourself primarily a growth investor, but holding some value stocks in there is important too. And you’ll need to decide what percentage of your total portfolio should go into each stock, bond, exchange-traded fund, mutual fund, etc.

2.) Do your research. Once you decide on a budget and where you’ll allocate your resources, you need to research vendors in various areas. I’m lucky enough to be getting married in the small New Hampshire lake town where my parents live and have many connections. The wedding venue is on the road where they live and one of my mom’s close friends is a wedding photographer. But other things, like the catering, had to be researched thoroughly before we signed a contract. I wanted to make sure that our guests would have a delicious meal, that the company was competitively priced and had good reviews from past customers.

When you invest, you also need to do some research. Our newsletters provide a great deal of this, but we always encourage you to learn more about a company/stock before you invest in it. This step can be very time-consuming, but it’s so important to check out the story, numbers and chart of any stock you’re considering. This is your hard-earned money you’re putting to work, so make sure it has the total package before you take the plunge.

3.) Stay organized. I’m really not sure how people planned weddings without the Internet. Google has been a huge resource for me, especially Google Docs, where I keep all my spreadsheets and documents relating to the wedding. Having these tools available has helped keep the wedding planning streamlined and organized.

When investing, you should keep track of all your trades so you can review them weekly, monthly, quarterly and yearly (depending on your trading frequency). Create some simple spreadsheets with necessary data and take the time to review what went right, or wrong, every so often so you can improve your investing results.

4.) Don’t rush it. You can’t plan a wedding in a week. Well, I’m sure someone has, but that’s certainly not the norm. Some things you’ll figure out right at the beginning of planning, like the date and venue, but finalizing seating charts and meal selection will come right at the last minute. Take the proper time to plan what will hopefully be the most memorable celebration of your life.

And in investing, you can’t expect to become an expert or make a ton of money right away. It takes time to learn how to invest well and to make money from everything you’ve learned. Patience truly is a virtue here. Remember, it’s a marathon, not a sprint.

5.) Hard work pays off. Planning a wedding is no easy feat. I’m lucky that my fiance truly cares about helping with the wedding and that we’re doing it together. Still, there are countless decisions to be made, emails to deal with and details to arrange. In the end, it will all be worth it to spend a wonderful day surrounded by our closest friends and family, but the road there isn’t always easy.

Investing is hard work too. For some of you, it’s your job, but for others, it’s a strong passion or hobby. Either way, it’s difficult to do it well, especially in times like these when the market keeps throwing curveballs. The best things you can do are educate yourself and stick to your system.

6.) You can’t control everything. Despite over a year of planning, I know that everything will not go right on our wedding day. It might rain, someone might not come who was supposed to be there or dinner might be late. But it’s important to try to let go of those things that you can’t control (good life lesson, too). Plus, rain on your wedding day is supposed to be good luck!

In the market, you can’t control what will happen either. You might thoroughly research a stock and decide to invest in it, only to have an analyst downgrade it or a bad news story come out that sinks it the very next day. Or the broad market could go into a correction that takes your holdings down with it. The point is that you need to stay flexible and somewhat philosophical. Never forget that human knowledge and predictability have their limits, that the future is always uncertain and that there is no “sure thing” in the economy, the investment markets or in our personal lives.

7.) Do-it-yourself. I’m very fortunate to be marrying an excellent graphic designer who created lovely wedding invitations for us to send out. When we first got engaged, we looked at what we could do ourselves and decided to tackle those projects. They’ve been fun and allowed us to add personal touches to the day. Of course, we’re not doing it all on our own. We’ve hired many people with their own specialties to help create a memorable event.

At Cabot, our newsletters are geared toward the individual investor and we fully believe that you can successfully take control of your finances. Figure out what your strengths are and play to them. And if you can’t do it all on your own, don’t be afraid to ask for help, whether that’s reading an investing book or subscribing to one of our newsletters, or even calling in a professional.

8.) Go your own way. One thing I learned after getting engaged was that people have very similar expectations for weddings. There seem to be certain things you have to do … or else! I’ve never been easily swayed by convention and neither has my fiance, so we’re bucking some traditions that just weren’t for us. We don’t really like cake all that much, so we’re having apple crisp for dessert. We don’t have “colors,” but more a palette that we’re drawing from. These don’t sound earth shattering, but you’d be surprised at some of the reactions to these seemingly minor choices.

We often talk here and in our other letters about being wary of herd mentality in the stock market. In fact, we often use sentiment to gauge when a correction might end and a bull market might begin anew (and vice versa). For instance, nearly everyone was running scared in March 2009 when the market finally bottomed. But only a few weeks later, our market timing indicators started turning positive and we began investing. We weren’t afraid to go against the prevailing negative tide because we had our market timing indicators on our side, but many investors stayed in cash and missed out on the incredible gains that followed.

Right now, negativity is high in the stock market again. People are pessimistic and have been for some time. That’s probably a good thing and it could be a sign that the nearly two-month correction will soon be over. When investors get caught up in a crowd, they stop thinking rationally and allow themselves to be governed almost entirely by emotion. This state of mind prevails at nearly all important market peaks and bottoms. I’m not predicting an end–we don’t do that–but it wouldn’t surprise me to see this storm pass soon.

What are your favorite investing lessons or tips? Leave them in the comments and you may find them featured in a future issue of Cabot Wealth Advisory.

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Now for today’s Contrary Opinion Button. Remember, you can always view all of the buttons by clicking here.

All Is Not Lost That Is In Peril

A perfect contrary sentiment (and one repeated in several other phrasings) this button reminds us that worry can be a good thing. If an investment is viewed to be in peril, it may well have already been pushed down by investors selling in fear, and thus be much closer to a bottom than a top.

In this week’s Stock Market Analysis Video, Cabot China & Emerging Markets Report Editor Paul Goodwin says that all of our market timing indicators are negative and it’s important to follow them right now, meaning you should be defensive and mostly holding cash. Paul says that you should look for stocks that are holding up well now, or even hitting new highs, for potential investments when the market gets back on its feet. Stocks discussed: Baidu (BIDU), TIM (TSU), Netgear (NTGR), Lululemon Athletica (LULU), Green Mountain Coffee Roasters (GMCR) and Crocs (CROX). Click here to watch the video!

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In case you didn’t get a chance to read all the issues of Cabot Wealth Advisory this week and want to catch up on any investing and stock tips you might have missed, there are links below to each issue.

Cabot Wealth Advisory 6/20/11 – Is There a Future for Natural Gas Vehicles?

On Monday, Cabot Global Energy Investor Brendan Coffey discussed the future of natural gas and the natural gas industry in general. Brendan discussed several stocks that he thinks are worth keeping an eye on as the sector develops. Featured stocks: Fuel Systems Solutions (FSYS), Westport Innovations (WPRT), Clean Energy Fuels (CLNE) and Devon Energy (DVN).

Cabot Wealth Advisory 6/21/11 – This “Boring” Stock is up 52% … and it Could Go Even Higher

On Tuesday, you heard from Nathan Slaughter of StreetAuthority’s Scarcity & Real Wealth newsletter as he discussed why taking a peek inside a few corporate checkbooks could signal whether business is strong. Nathan says that the petrochemicals industry looks strong now and he likes Dow Chemical (DOW) in particular.

Cabot Wealth Advisory 6/23/11 – Two Stocks for a Slow Economy

On Thursday, Cabot Benjamin Graham Value Letter Editor J. Royden Ward discussed his recent travels to the colorful island of Key West. Roy also wrote about the slow U.S. economy and two stocks that he thinks could do well in the coming months. Featured stocks: Dollar Tree (DLTR) and EZCORP (EZPW).

Until next time,
Elyse Andrews
Elyse Andrews
Editor of Cabot Wealth Advisory

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