A Long-Term Investing Approach Does Not Imply Inaction

By Tom Madell, Publisher and Editor of Mutual Fund Trends and Research
Apr 11, 2003

After nearly 4 years of writing about mutual funds, is there anything new for me to say?

I suppose according to many people, I never had anything new to say even when I started writing back in May, 1999. "I'm a long-term investor, so why would I need ongoing advice" I imagine most them said then and still do today.

Likewise, most of us are long-term taxpayers; does this also mean that we shouldn't even try to keep up with the complexities in how Uncle Sam taxes our bottom lines while at times giving those "in the know" various opportunities to pay considerably less? Apparently so, as many of us, to our own detriment like in our investing, often don't choose to stay on top of these matters either. Regarding these "taxing" matters, we often just muddle through, frequently failing through our lack of knowledge to take full advantage of some of the various tax breaks and planning strategies that could especially help when recessionary or retirement times come our way, which they inevitably do. Making use of a tax expert (or other financial or legal expert), as I only have just recently discovered myself, often saves you far more money than the service costs.

And similarly, most of us are long-term believers when it comes to our democratic way of life. And so we tend to sit back and "let them fellers there in Washington" make decisions for us, trusting that we don't have to worry about the correctness of their every move - "they know what's best; they'll get it right"; after all, they are our elected representatives. (Besides, what can the average citizen do anyway?) International discord, deficits, a tottering economy? No need to panic; everything will turn back in our favor soon - it always has. Let's hope so, but I think these usually well-intentioned guys who are there after all to serve our needs, need some enlightening input a lot more than not. Politics, unfortunately, often have a broad, distorting effect on what sensible decisions might be, at least in the short run.

My overriding point is that there is a certain similarity in how we may deal with each of the above "long-term" situations. We tend to think of such matters as just too big, complex and "out of our control" to invest our efforts in trying to keep up with. (Not to mention who even has the time.) Thus, we "do what we can" and trust that the future will take care of itself.

Well, it's not for me to say that anyone should think or act any differently. And so I won't. But remember, this IS America. We, as Americans, unlike in so many other countries, do have the power to change our lives and succeed mainly because we have access to so many opportunities and services that are often limited in other countries. But in order to succeed, we have to choose to act, propelled by the belief that we can have an effect on our own, and our family's destiny.

Getting back to investing, if one truly believes as I do, that one can gain an advantage over otherwise less than favorable circumstance through information and actions based on that information, then any primarily factually-based information (as opposed to just "expert" opinions which abound everywhere), should clearly be helpful to those seeking to influence their financial well-being for the better. But for those who want to believe that everything will turn out equally good in the long run for those who did little to learn about their investments (or their taxes, or the issues facing their government), then I guess there is nothing more that they need to do other than to wait to see if the future proves to be as secure as so many of them seem to take for granted it will be.

Tom Madell, PhD

About the Author

Tom Madell, Ph.D. publishes free mutual fund advice at his website at http://funds-newsletter.com. His Newsletters, beginning in May, 1999, were designed for educational purposes only and are not-for-profit and ad-free. Had you been reading and following the advice on this site, you would have done far better than the cumulative negative stock market returns over the last 5 years. Tom's investment articles have been chosen as featured articles on numerous other websites.