Real Women Have Curves - How To Become Curvaceous Investors

2002: Real Women Have Curves

Financial services is full of charts and graphs. Many will be convinced of the patterns that they see in them. However the further you stand back, the more the rather jagged edges look like curves. One might say that real investors (men and women) - or rather good ones, have curves. You can plot the performance of pretty much anything if you have the data. However many (most) of the charts that are shown or used for marketing purposes are pretty misleading. The majority fail to take account of inflation - plotting actual growth, not necessarily real growth (above the rate of inflation). Some fail to take account of income being re-invested and some are simply manipulated to show their story in the best possible light, taking great care about the data selected and the time frames involved.

Here is one chart that is helpful and concerns investor perception. The investor sentiment curve. This is perhaps the most real curve that you need to understand. The important thing when taking advice or implementing an investment strategy is that you understand where you and the investment manager believe you are along the curve. This impacts the decisions that an investment manager will make.

It is interesting to note that from studies across the world, FinaMetrica (the risk profiling tool that we use for our clients) have found that the vast majority of clients do not change their general attitude towards risk, some do, but most do not. Most investors are... well "medium risk" which is a very unhelpful term, but something that most of us probably know in our core being. Conversely, most financial advisers and investment managers score far more highly on the risk scoring system - they are higher risk takers. This might be for a number of reasons, perhaps more aware about how markets operate but also perhaps because the majority are wedded to the success of markets. This may and would have an impact on your investments if you simply opted for the advisers appetite for risk rather than your own. That is why I believe it is really important, vital even, for you to ensure that your appetite for risk and your capacity for loss are your own and not mine, or anyone else's. Getting your portfolio right should mean that whilst there will be disappointments at times, there should not be unexpected results.

Oh, as a by the way - America Ferrera, the star of "Real Women Have Curves" and "Ugly Betty" is currently performing in the musical Chicago, just off Leicester Square.

DT