Peace of mind is more important than profit potential

Linda and I were standing in line to get a carnita plate at the Hispanic Festival in Jefferson Barracks Park in St. Louis, talking with a couple we had just met.

It happens all the time. Linda smiles, says "Hi!" and it's like sodium pentothol, for total strangers start talking with her as though they were old friends.

After the "Where are you from?" and "Have you been here before?" stuff, the question of "What do you do?" was next.

"So, you manage money for rich people?"

"I think of it as helping people of any income level accumulate wealth."

"Man, that would drive me nuts. With the market being this high, I would worry constantly about those investments. I'm not rich, but I have a good-sized portfolio and I am getting nervous very nervous. Do you think the market is going to come down? Should I get into bonds or money market funds?"

"I can't give you a specific recommendation, because I really don't know anything about your situation why you're investing, your risk tolerance, what you hold and so forth. But I can share with you advice I was given in the '60s that might help."

First, it's better to be out of the market and wanting in than to be in the market and wanting out.

Second, Gerald Loeb wrote in his classic book, "The Battle for Investment Survival," "one should always sell off to the sleeping point."

Our wives stayed in line for the carnitas while my interlocutor and I shifted over to booths, he having offered to buy me an adult beverage.

We discussed in more detail his investment concerns that, he revealed, really were affecting his sleep.

Although as long-term investors we do not believe in market timing, we recognize that there are emotional or psychological stresses that many investors face in uncertain times.

If you are uncomfortable being 100 percent invested for whatever reason be it Y2K, market levels, or the fact that you are going on a world cruise and will be out of touch bear in mind that you do not have to be fully invested all the time.

Peace of mind is very important. Making money is what investing is all about, but there is more to life than making money. If your investments are stressing you out, step back and look at what is causing the grief, then do something about it. Sleepless nights, high blood pressure, or a daily, grinding worry that puts a strain on your personal relationships are an unacceptable price to pay for hopes of profits.

Investment pressures, as witness the recent incident in Atlanta, can exacerbate behavioral disorders. While that is an extreme example, it may have the positive effect of causing unseasoned investors (especially day traders and speculators who have confused brains with a bull market the past several years) to examine their values and perspectives.

Regardless of their form or location, there will always be investment markets. They have an infinite lifetime. Your relationships are finite in their life expectancy.

Talk with your financial consultant about your concerns. He should be willing to discuss with you alternatives that can ameliorate your worries. If he suggests changes with which you are not comfortable, then he has not listened to you and considered your personal peace of mind.

If that happens, what do you do? Fire him, just as you would any other service provider who won't listen really listen to you.

Convert as much of your portfolio to cash as is necessary to meet your comfort level, and then carefully and methodically seek a new consultant.

(Clark Davis is a 30-year investment veteran and CEO of Saint Louis Investment Advisors, a specialized money management company. Questions or comments can be directed to him by mail via The Springfield Business Journal, 313 Park Central West, 65806 or by e-mail at sbj@sbj.net.)