The nature of markets and investing suggests that we too should be dynamic with our thought process and actions. The investment industry is one that is blessed or plagued to be thought of as particularly dynamic, where things change on a second by second basis.
So it is understandable to come across investors that also think they should be equally dynamic in their approach to investing. How many times have you been tempted to buy or sell in the past few years?
The reality is that combining dynamic with dynamic surely makes for a dangerous concoction.
I am sure that the statisticians out there will tell us that on the toss of a coin if we stick with heads every time we have the same chance of being right as if we changed our call on each toss.
If that is true then can we say that if we stick with the funds we have (assuming what you have is already good quality), rather than switching from fund to fund, that we are equally as likely to be right?
If so, and you then introduce the fact that it costs you every time to change your mind, then surely sticking with what you already have is much cheaper and equally likely to deliver the same return?
An investment strategy does not have to be complicated, dynamic, expensive, exciting dare I say it. It just needs to be right.