Find a good job and stay with the company for 30 years. You have most likely heard this advice from a Baby Boomer who was able to retire with a pension and benefits for the rest of their life. If you have been in the workforce for the past 10 years, you know that this type of commitment towards employees no longer exists for companies. Investors (i.e. shareholders) are forcing companies to be more profitable and cut more costs which equates to less perks and loyalty to employees.
How does this affect your investments? Directly, it doesn’t. However, there is a mindset that can be used that can drive your investment success through the roof.
Treat your portfolio as it is a company that is constantly seeking to cut costs and increase revenues. You are the CEO of this company and the profitability directly affects your bottom line. Your investments are your employees.
Let me ask you a question: If you owned a company and an employee decided to come in and start breaking your computers, chairs, and desks which costs you money, do you keep them around? No! You fire them before they cost you any more money! You don’t even think twice about it! Now, if your employee comes in and sits in her chair and falls asleep for 8 hours a day, how long do you keep her around? Not very long if you ask me. That employee is not making you any money sleeping.
By thinking of your investments as employees, you should fire them if they are destructive (costing you money) or useless (not moving). You can’t make money unless your investment is going your direction, period. To make sure that they make you the most money, don’t pay top dollar for them. You want an employee that has the lowest salary and is the most productive. This is the trend that is happening in the job market and it is exactly how layoffs are measured. Companies fire the employees that are expensive and slow. Companies fire employees that are harmful to the business. Companies keep the productive and inexpensive employees. You need to do the same.
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