Craig Fehr, CFA®
Head of Edward Jones Private Wealth 

Angelo Kourkafas, CFA®
Senior Global Investment Strategist 

Market sentiment, policy backdrop and geopolitics can change quickly. Your investment approach, however, doesn’t have to. Everyone’s situation is unique and, as such, deserves a personalized strategy. At the same time, we think certain behaviors and actions are widely consistent among investors that help put themselves in position for investing success. Adopting these “habits” can help you to navigate the ups and downs of the market and help keep you on track toward your long-term financial goals.

In our view, highly effective investors:

1. Are goal-oriented. You wouldn’t build a house without a blueprint, right? For starters, it documents the vision of what you want to construct and captures the personal details in a home that make it your own. Second, it serves as the guide for the construction process, providing reference points along the way. It’s similar for investors — your goals are the design of what you’re investing to achieve, with your personalized financial strategy serving as the blueprint to help achieve them. Investment conditions shift and personal situations can change, sometimes so much so that it can be easy to lose focus on the bigger picture. Investors that design a strategy tailored to their goals can be in a better position to achieve them because they have a blueprint to serve as a concrete reference to measure progress.

2. Regularly check their GPS. Left unattended, a small deviation from your intended path can put you further off course as time passes. Effective investors recognize the importance of regular checkpoints, which can help them remain on track. They use systematic financial reviews to assess their current situation, evaluate existing goals, establish new ones and revisit their tolerance for risk. Any changes are incorporated into their investment strategies because they know regular course corrections can help prevent bigger surprises down the road. Even well-diversified portfolios will experience imbalances as different investments ebb and flow over time. Successful investors identify the allocations that are appropriate for their long-term strategy and then make adjustments as weightings and investment conditions change. Not only does their rebalancing strategy help promote buying low and selling high, but it also enables them to set appropriate expectations for the risk and potential return they can expect from their portfolio over time.

3. Don't put all their eggs in one basket. This cliché may be old, but it still rings true as the value of diversification proves vital during times of market volatility. Constructing a well-built portfolio starts with the appropriate allocation between equities and fixed income. From there, effective investors look to additional layers of diversification, building the mix of domestic and international investments, followed by assembling a broad mix of asset classes (large-, mid- and small-cap stocks; investment-grade, high-yield and international bonds; cash; etc.), and then looking further to equity-sector and bond-maturity diversification. The value is seen in their results. Not every investment will be a winner all the time, but a well-designed portfolio includes a mix of investments that complement one another, with some outperforming as some lag, and vice versa.

4. Put time on their side. Effective investors evaluate market moves against a calendar (marked with their financial goals), not a stopwatch. While headlines have the tendency to prompt knee-jerk reactions, investment decisions are best made with a broader perspective. For example, when viewed on a yearly basis since 1976, the stock market has been positive 82% of the time.¹

5. Stay cool when the market’s temperature rises. No one likes market volatility or declines, but effective investors are appropriately prepared before downturns happen by raising the quality of their investments, enhancing their portfolio diversification and setting realistic expectations for market fluctuations. And when pullbacks emerge, effective investors stay calm, focusing on economic and market fundamentals instead of sensational headlines. Importantly, they base their investment decisions and adjustments on their goals, not short-term swings in stock prices. Doing this allows them to survey the room for opportunities when others are scrambling for the exits.

Talk with your Edward Jones financial advisor about opportunities to put these habits into practice to help ensure you stay on track toward your goals.