Last year, my wife and I went with friends to a local showing of the Banff Mountain Film Festival.  For those unfamiliar, think of it as a conglomeration of short-films based on outdoor adventures on steroids.  If you have not been, it is certainly worth going to watch these adventure seekers test their luck against some of nature’s toughest environments.  Whether it is tightrope walking across an abyss, mountain biking, surfing, or rock climbing these personal stories will be both entertaining and memorable.  I came away with a deep appreciation of our planet, which offers an almost infinite number of ways to explore and test the limits of the human mind and body. 

Much like the some of the funambulists in the Banff videos, I feel that advisors sometimes walk the tightrope of investing.  Constantly being pulled in infinite directions from multiple sources can be challenging, confusing, and exhausting.  Taking it to the next level, what are we supposed to do with almost $200 trillion of global investment selections, and endless economic data being published, tweeted, posted, or blogged?  Not to mention, what about politics?  We are surrounded by turbulent and contrarian viewpoints on absolutely everything.  It is not just advisors, it is our clients that are bombarded as well. 

How do we combat this?    

We need to increase our rotational inertia.  What!?  This is a measure of resistance to a change in direction of rotation or movement.  A funambulist uses a balancing pole to create a rotational inertia to help stabilize and lower their center of gravity while walking across a tightrope.  In the same way, advisors need to exhibit resistance to the turbulence occurring in our investment environment.  We also need to serve as a source of balance for our clients. 

How do we do this? 

1)  Stay focused on the long-term goal.  It is easy to be distracted by short-term noise and dislocations.  Constantly chasing and reacting to these event-driven headlines will likely end in disaster. 

2)  Use a significant anchor.  Whether this is a core equity strategy or a core bond strategy, having a significant anchor in a portfolio will help stabilize it through turbulent environments.  This anchor also fosters an ability to be creative and attempt to add value around the edges.  While the creative investment concepts may not always work, having a solid anchor helps to avoid major pitfalls.  Faith, family, and friends will also help in this category. 

3)  Say “No.”  This can be difficult from both a client and advisor prospective.  It is ok to say, “No”, to a new shiny investment strategy, economic data source, new Twitter feed, or even to a potentially overbearing prospective client.  Having too many of each item mentioned will easily knock you out of balance and jeopardize existing client relationships and portfolios. 

4)  Work with stable people.  Seeking out others who share a similar stabilizing mindset will add balance to your life.  I am not suggesting group think!  We need contrarian viewpoints and ideas, but we need to make sure the opposing viewpoints are consistent and based on discernible facts not raw emotional reaction.  

While I certainly left out many stabilizing items from the list, the goal was not to over complicate the concept.  I am by no means perfect at staying true to the list, as nobody is perfect.  A great goal is to exhibit enough inertia to have a minimal imbalance in life and in investments.  I call this my tracking error. Having a 3-5% tracking error is not the end of the world, however 15-20% suggests a need for a course correction! 

As we are constantly distracted by the roughly 250,000 investable securities and countless strategies available in the world, try not to get off balance.  There is no perfect investment list, manager, strategy, or advisor.  The goal is to stick to a stable investment process, stable economic sources, and stable people.  I guarantee your life will be better when you are stabilized, and your clients will be better off too.  I assure you, this is a lifetime process and is directed at myself as much as those reading. 

If you do need to experience excitement and adventure, I’d recommend achieving it through the exploration of our awesome planet (or at least watching people do it)!  To find out more information about the Banff Mountain Film Festival, click the link below, while there, I would recommend viewing “Surf the Line.” 



Registered Representative offering securities through Cetera Advisor Networks LLC, member FINRA/SIPC. Advisory services offered through Carroll Financial Associates, Inc., a Registered Investment Advisor. Carroll Financial and Cetera Advisors Network, LLC are not affiliated. Orders to buy or sell securities cannot be accepted via e-mail or voicemail. E-mail correspondence is routinely monitored for regulatory compliance purposes. Everything we’ve discussed is just our opinions, they should not be construed as a suggestion to buy or sell any specific investment.  All Information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance information is historical and not indicative of future results.  You cannot invest directly in an index.  Past performance does not guarantee future results.