Many times over the years, I have seen a common problem among prospective clients who come into my office. Sometimes they describe the problem a couple of different ways, but it usually goes something like this: “I’m getting close to retirement and I am really concerned about the impact a big stock market correction could have on my portfolio, and thus my ability to retire when I want.”
It turns out that the screw that is sticking out is a Phillips screw. The best tool for that job, then, is a Phillips screwdriver. However, we don’t have a Phillips screwdriver in our toolbox. In fact, we don’t havescrewdrivers in our toolbox. But we do have a hammer. So we take that hammer and pound that Phillips screw back into the wooden doorframe, and the problem’s solved!
Now, let’s change the scenario around a little bit. Instead of a screw sticking out of the doorframe, let’s say it’s a nail sticking out. Now, that Phillips screwdriver is pretty useless. The best tool for that job is the hammer. The hammer, very effectively and efficiently, will be able to pound that nail into the woodwork. It’s not like the Phillips screwdriver or the hammer isn’t a good tool. You just need to use the right tool for the job.
Investment tools all have their good points and bad points. Understand that there is no perfect investment tool out there.