We All Have Money Blind Spots

Blind spots, in the realm of investing, can be likened to the unnoticed smudges on a pair of glasses. They obscure a clear view of reality, but can easily go unnoticed. In the world of finance, this can have costly implications. 

Imagine Sarah, an IT executive. She’s tech-savvy and feels very confident investing in the tech sector. She sees the potential in every new startup, understands the nuances of emerging technologies, and believes fervently in a tech-dominated future. Because of this, Sarah’s portfolio is overly weighted in tech stocks. While she might understand the industry, she may have placed herself at risk if there’s a downturn in the tech sector. Sarah’s blind spot is an over-reliance on what she knows and loves.

Similarly, James, a loyal, long-term employee of a publicly traded company, may hold a significant portion of his investments in his company’s stock. It might seem like a good strategy, given that he believes in the company’s mission and its potential. Yet, objectively, he may be exposed to high risk if that one company faces a headwind. His blind spot is the deep-seated belief that his company stock is the right choice when diversification likely makes more sense. 

Ava, a dedicated environmentalist, heavily invests in green companies. Her passion for sustainability guides her choices. However, her portfolio may be at risk due to its lack of diversification. While she believes in the potential of green energy, the industry is prone to market fluctuations and technological shifts. Ava’s blind spot is her emotional attachment to the cause, potentially overshadowing a well-rounded investment strategy. 

Managing these blind spots can be challenging, but here are a few steps you can take: 

  1. Diversify Your Portfolio: Avoid putting all your eggs in one basket. Diversification helps to spread risk across different types of investments. Even if you have a strong belief in a particular sector or company, it’s essential to have a mix of assets to cushion against potential downturns.
  2. Seek Professional Advice: Just as an athlete might benefit from a coach, investors can gain perspective from financial advisors. These professionals can provide an objective view of your investments, helping you identify areas of risk and suggesting ways to optimize returns.
  3. Regularly Review Your Investments: Financial markets and industries evolve. What might have been a good investment a few years ago might not be the case today. Regularly reviewing and adjusting your portfolio ensures it aligns with your current financial goals and market conditions.
  4. Separate Emotions from Investing: It’s natural to have emotional attachments, like Ava’s passion for sustainability. However, investment decisions should be based on sound financial principles and not solely on emotions. It’s essential to strike a balance between personal beliefs and financial prudence.
  5. Educate Yourself: Continuously educate yourself about the financial markets, emerging trends, and investment strategies. The more informed you are, the better equipped you’ll be to recognize and address any blind spots in your investment approach.

Keep in mind that emotional resistance often comes when confronting our blind spots. Just like someone might be surprised to find out they’ve been running “incorrectly” all their life, an investor might feel a sting of pride when it’s pointed out that their stock picks aren’t as savvy as they thought. 

In reality, everyone has blind spots, not just in investing but in various facets of life. They shape our choices, often without our realization. By acknowledging their existence, seeking external guidance, and being open to feedback, we can navigate the treacherous waters of the investment world with a clearer vision. After all, the go

Investing involves risk, including the possible loss of principal and fluctuation of value. Past performance is no guarantee of future results.

This letter is not intended to be relied upon as forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date noted and may change as subsequent conditions vary. The information and opinions contained in this letter are derived from proprietary and nonproprietary sources deemed by Roush Investments, LLC to be reliable. The letter may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projection and forecasts. There is no guarantee that any forecast made will materialize. Reliance upon information in this letter is at the sole discretion of the reader.

Please consult with a Roush Investments, LLC financial advisor to ensure that any contemplated transaction in any securities or investment strategy mentioned in this letter align with your overall investment goals, objectives, and tolerance for risk.

Additional information about Roush Investments, LLC is available in its current disclosure documents, Form ADV and Form ADV Part 2A Brochure which are accessible online via the SEC’s investment Adviser Public Disclosure (IAPD) database at www.adviserinfo.sec.gov, using SEC # 151288.

Roush Investments, LLC is neither an attorney nor an accountant, and no portion of this content should be interpreted as legal, accounting or tax advice.