I was speaking to a physician friend just the other day and he was describing how rapidly the medical treatment environment is changing and how doctors today need to be aware, informed, and adjust strategies based on current knowledge.
Great advice for medical care. Shouldn't the same hold true for your investment strategy? Yes!
The truth is the world is different than it was 10 or 20 years ago. With Asia rising, the West struggling under massive debt, commodity consumption going through the roof, and the shadow of high inflation haunting developed countries, there is no way that your current investment strategy can remain the same as it has in the past.
You must adjust and react; you must. To be sure, long-term has its place and is an important part successful investment returns, but one cannot ignore the reality that the world is changing rapidly and you need to adjust to match the changing conditions.
Global investing including growing Asian economies in an obvious first step. Be targeted and focus on nimble companies looking to capitalize on the changing environment (MCD with massive Asian expansion).
To ignore massive deficits and the potential resulting inflation is a perspective that carries great risk. Hedge against future inflation. Surging more affluent populations and a growing emerging infrastructure will consume commodities.
Jim Rogers' advice makes sense; commodities are a way to position for the new future. Buy cash flow, great leadership, and tailwind industries. Invest in the best for what will likely be a very turbulent investment landscape.
Don't throw out past strategies that work well. But modify them based on the new environment. Successful investors adapt and take advantage of new opportunities while seeking to reduce new risks. Past performance is no guarantee of future success. Likewise, past strategies are not guaranteed to work in the future. Important words keep in mind in a rapidly changing environment.
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Michael A. Yoshikami, Ph.D., CFP®, is Founder, President, and Chief Investment Strategist of YCMNET Advisors, Inc., a registered investment advisory firm (www.ycmnet.com). Michael oversees all investment and research activities of YCMNET. He is a respected lecturer speaking frequently on market issues, tactical asset allocation, and investment strategy. He appears regularly on CNBC and CNBC Asia and can be reached directly at m@ycmnet.com.