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Just because you trust your investment adviser doesn’t mean you’re never going to lose money.  The stock market is not risk free. There will be periods of drawdown and sometimes significant drawdowns in account value.

How well you understand the methodology and process behind your portfolio is critical during these times.

You don’t need a perfect investment philosophy (that doesn’t exist) but you need one.

Here’s Ben Carlson on defining your philosophy:

“Letting go of all hope of ever finding precision in the financial markets is one of the first steps toward a truly sustainable philosophy.”

Source: Ben’s recent article in the AAII Journal

Do you have a defined philosophy for managing your portfolio?  Do you know why it works?  Do you understand there will be periods where it looks like it doesn’t work?  Do you know what market environments may cause that?

Spend time aligning your philosophy with how your wired emotionally.  That’s where the rubber meets the road.  Most investment philosophies or strategies look great on paper, but would they look good in your portfolio, with your money, in real markets?

Being able to look in the mirror and honestly evaluate your personal psyche plays a huge role in determining your investment success.

Define your philosophy, know it, and make sure it “fits” you.  If you can’t explain the what and the why in your portfolio, it’s time to ask questions.  Open those lines of communication.  Make sure you understand and agree with it.  That communication is beneficial for all parties involved.