Don Steinmann's Investment Tip of the Week

Don Steinmann's
Investment Tip of the Week

That’s Not Why I Wear a Watch

This is one of the truly great true stories from my life. Many years ago I was consulting for a company that had an employee named Kevin. Kevin always wore an expensive and very old chronograph watch. One day he complained that it had gotten wet, and was now losing an hour a day. But he continued to wear it. I said “Why not go down to WalMart and get a $10 watch that will keep perfect time?”. And he got a very stricken look on his face and said “That’s not why I wear a watch”.

That has always been a head scratcher to me. But you know, you run into this same thing in the investment world. Do investors always choose the equivalent of that $10 digital watch? No. In fact frequently they may be involved in day trading or alternative investments, that are ’sexy’ but may not be very profitable. It’s a question we should ask ourselves. Am I investing in this because over a 5 to 10 year period I’ll make a solid return? Or am I interested in wind farms or rhodium metal in part because I can brag about it to my friends, even though I may not even understand the costs of the risks? It is important to keep the goal in mind, and always choose your investments, or your watches, for the right reason.

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