Download How do you recognize an Uncle Frank (or an Aunt Sally)

How do you recognize an Uncle Frank (or an Aunt Sally)? Many times, but not
always, you find that you naturally seek these people out on important life and
investment decisions. You listen to them. You get along with them, even though you may
not always like or agree with what they say to you. You do this because you sense that
your Uncle Frank has your best interests in mind and wants to see you do well in life.
Another reason you are comfortable with your Uncle Frank is that there is not a trace of
envy, jealousy, or rivalry in the relationship between you.
Your Uncle Frank (who may very well be your Aunt Sally) is comfortable with
himself or herself and possesses some degree of experience, and usually has attained a
measure of success in life. They tend to complement you and bring out the best in you.
They genuinely like you, encourage you, and often provide mental and emotional support
in difficult times and markets.
Uncle Franks are rare and don’t grow on trees. Many times, it can take quite a
while for you to realize who your Uncle Frank is. Uncle Frank may be a cousin, a
grandparent, a niece, a nephew, or a neighbor. Although your Uncle Frank may be a
coworker or a spouse, it’s frequently the case that close proximity does not guarantee the
conditions for an Uncle Frank – type relationship. Your Uncle Frank may or may not be
in the investment business.
Whether your Uncle Frank has known you for a long time, he is pretty good at
spotting your strengths and weaknesses. Your Uncle Frank has an uncanny ability to
augment your strengths and minimize your weaknesses. He can often inspire you to make
the best of what resources you have and take your game to the next level.
Uncle Frank knows that the current price of an asset is not necessarily what it’s
worth. It may be worth far more or far less than it trades for today and Uncle Frank is
very good at helping you see the difference and appropriately take advantage of the
resulting opportunity. He is market - savvy and knows when you should press your
advantage with a successful investment and when to cut your losses with an unsuccessful
one. Your Uncle Frank has a definitive set of investment beliefs, and his knowledge can
help you translate thought into investment action.
Your Uncle Frank recognizes that it is human to err and that everyone is going to
make investment mistakes. Equally importantly, he always seeks to learn from
investment mistakes and tries to avoid repeating them. Without discouraging you, your
Uncle Frank is nevertheless not shy about throwing cold water on any of your grandiose,
pie - in - the - sky asset allocation and investing schemes that have no chance of turning
out the way you have deluded yourself into thinking they will. Your Uncle Frank wants
you to achieve your realistic goals by dealing in reality and meaning rather than in words
and dreams. He takes time to ask what can go wrong in an asset allocation and/or an
investment strategy.
For you to get the best out of your Uncle Frank, you need to be honest and open
with him. You need to be respectful of his time, and you need to give him concrete
evidence and feedback, showing that you hear and understand his message. In turn, there
are a number of qualities and attributes you should seek from your Uncle Frank.
Your Uncle Frank can help you understand human nature in crowds and your own
individual human nature. You want to gain from your Uncle Frank a sense of how
markets work when they are functioning normally, how markets behave during periods of
Excerpted with permission of the publisher John Wiley & Sons, Inc. from The Little Book
that Saves Your Assets, What the Rich Do to Stay Wealthy in Up and Down Markets.
Copyright (c) 2008 by David M. Darst. This book is available wherever books are sold.
high or low volatility, and how investors behave during episodes of extreme optimism or
pessimism. You want your Uncle Frank to explain and apply important lessons and
conclusions from history.
One of the key reasons you rely on an outside person in asset allocation and
investment matters is to help you separate the signal from the noise in all the short - term
and long - term information that comes your way from the worlds of finance, economics,
and politics. Sometimes, a conversation with your Uncle Frank can help you make
judgments about what is really happening. You should seek Uncle Frank’s views and
viewpoints to heighten and focus your curiosity about cause - and - effect relationships
and how things work in the world. Another insight your Uncle Frank can help you with is
knowing the difference between luck and skill in your investment successes.
Excerpted with permission of the publisher John Wiley & Sons, Inc. from The Little Book
that Saves Your Assets, What the Rich Do to Stay Wealthy in Up and Down Markets.
Copyright (c) 2008 by David M. Darst. This book is available wherever books are sold.