Self-control strategies

Saw the following, relating the results found in a report by Barclay's Wealth. (Text below copied from a blog posting about it - the report itself may be found here:
formatting link
What caught my attention was Strategy #1, which I'v seen other folks post about in other contexts as well. It just seems to me to be an *terrible* strategy. It's up there with the idea of buying load mutual funds as a way to trick yourself into not trading frequently because of the costs - it's just a bad idea.
(There may be other reasons to buy illiquid investments - perhaps the best is if it's intended to be a very long-term holding and the illiquid nature leads to great low-price opportunities to buy from someone who is under pressure to sell)
The others are mostly pretty good strategies. I especially like #3 and #5 - rules and cooling-off-periods. The example of a rule they provide may actually be controversial (ie. to a total-return portfolio management style), but the idea of rules - a system - is great.
The report identified seven self-control strategies to help people counter their tendencies to make bad financial decisions:
1. Limit the options. Purchase illiquid investments to avoid the urge to sell investments when the market is falling.
2. Avoidance. Avoid information about how the market or portfolio is performing in order to stick to a long-term investment strategy.
3. Rules. Establish and use rules to help make better financial decisions, such as spend only out of income and never out of capital.
4. Deadlines. Set financial deadlines. For example, aim to save a certain amount of money by the end of the year.
5. Cool off. Wait a few days after making a big financial decision before executing it.
6. Delegation. Delegate financial decisions to others, such as allowing an investment adviser to manage your portfolio.
7. Other people. Use other people to help reach financial goals. An example would be meeting with a financial adviser to make and execute a financial plan.
David S. Meyers, CFP(R)
 Click to see the full signature
Reply to
David S Meyers CFP
I wait for the quarterly report before I make a decision. I look at the financial data such as sales, earnings, and book value to get an idea of when to sell.
Spin offs, mergers, and acquisitions make decisions difficult for me.
-- Ron
Reply to
Ron Peterson

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.