Working the Net

The Internet has perhaps made some things too easy.

The Internet has made our lives easier in so many ways—we can make airline and car rental reservations in minutes, instantly check on what time a movie is playing, or follow the Nationals game even if it’s not on television. Our kids in college are now able to ask us for money at any time of the night or day.

As that last example shows, in some areas of modern life, the Internet has perhaps made things a bit too easy. I would include investing in that category. A generation ago, you would have had to run any kind of stock transaction past your broker, who would then have to make some calls to execute the trade. But now, thanks to the Web, you can make that trade in seconds with just a few keystrokes, and with no one looking over your shoulder. If you read the glossy financial magazines or even watch Law & Order, you know there are plenty of people out there willing to help you make stock trades all day long.

You’ll be making those trades on your own, of course, with little technical advice or guidance. That’s really only half the problem, though. The larger issue with Internet trading is that if you’re investing for the Big Picture, with long-term goals in mind, you don’t need the capability to make stock purchases every five minutes. Quick and easy stock trades are the antithesis of a prudent, long-term financial strategy.

In our recent newsletters, we’ve been discussing the Big Picture approach to investing. Now the question at hand is this: What is the role of the Internet in the Big Picture?

A World of Data

Instant information,
not instant action.

As a source of information, the Internet is certainly hard to beat. In an arena like stock and bond pricing, where the information is literally changing all the time, those of us without a stock ticker in our homes can get unbeatable data on the prices of our investments, or our potential investments. There’s a certain value to having that kind of instant updating, and a certain addictive quality to watching your portfolio tick up and down and up again over the course of a day.

But if you’re a serious investor, with long-term financial goals and a carefully plotted strategy designed to meet them, your time horizons are not the next 20 minutes but closer to the next 20 years. If, to take one example, you have made the Vanguard Index 500 a part of your portfolio, you probably plan to hold onto it for years, if not decades. Whatever happens to its price today, or even this week, will in the long run be irrelevant.

That’s not to say that there’s no good use for the Internet when it comes to your financial plans. It’s a marvelous way to disseminate information on financial strategies and ideas, or to find more background on topics you’d like to learn about. It’s a great way to gather a variety of opinions on almost any subject. The most important thing to remember, though, is that you want instant information, not instant action.

In a way, the instant gratification provided by the Internet is the opposite of what we’ve been talking about as the Big Picture approach to financial planning. While the breadth of information available on the Web fits into that worldview, the incessant activity represents the complete opposite.

The Long-Term View

Careful, considered decision-making beats impulsiveness for the long haul.

Our approach at Bernhardt Wealth Management is to deal with each financial decision in a measured, prudent manner, never taking our eye off the long-term implications. Impulsiveness is a very bad quality in a wealth manager; we’re all about careful, considered decision-making. We love Sam Waterston too, but we’d rather see him on Law & Order than have him make our financial decisions for us.

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