Sticking to a Tortoise Plan

Today I made a contribution to my IRA and invested it my tortoise investment strategy. That's right, I made the decision to increase my investment in the stock market. Some of the readers of this post might think it foolish to put more in the market right now. So, why did I make this contribution? Because it came up on my calendar to make the transfer as part of my long-term savings plan, and I see no reason to change it. In fact, I see this current economic crisis as an opportunity.

Warren Buffet has many famous quotes, but one of my favorite is: "We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." You'd be hard pressed to find a time when the average investor was more fearful than now. I wonder if this is the mentality driving Berkshire Hathaway's recent decisions to invest in GE and Goldman Sachs, both struggling companies.

Though I try to check both the emotions of fear angreed at the door when I make investment decisions, I see this contribution to my IRA today purchasing more shares than I was able to purchase with the same contribution last Spring. Assuming I will be hanging onto these shares for decades to come, I'm happy to purchase them at today's fear laden prices.

Don't get me wrong, it's been painful watching the value of my retirement accounts decline over the last year and months and especially the last few weeks. It's been even more painful watching the value of my client's accounts decline. But as a tortoise investor, I also have the ingrained expectation that troubling economic conditions are bound to happen from time to time...knowing I am better off over the decades weathering the storm as opposed to trying to time the top and bottom of each boom and bust.

I've realized lately that expectation is everything when it comes to making sound investment decisions. It's like 2 doctors each giving you a shot. The first says, 'this might hurt a bit'; and the second says, 'this won't hurt a bit'. The fact is you are going to feel some degree of pain, perhaps not as much as expected with the first doctor and certainly more than expected with the second doctor.