Oven cleaning and your portfolio
Aweek and a half and quickly approaching. Yikes. I just got back from a two-day vacation with my wife and was politely informed that it’s now show time! We have officially transitioned from vacation to Passover cleaning mode. It’s important to note that one of my jobs is to clean the oven. I am not into wearing gloves when I clean, and I measure success in cleaning by the number of cuts and scratches on my hands and not if clean or not.
Obviously the main aspect of cleaning is to rid one’s house of hametz. But there is another aspect mentioned by hassidic masters. That is that by scrubbing and scrubbing, we should be: 1) trying to clean ourselves spiritually and get back to our religious equilibrium; and 2) create a sense of slavery and reestablish what true freedom means.
Speaking about the aura of Seder night, Rabbi Ezra Bick wrote: “In the modern world, we tend to take freedom for granted, and perhaps that is why it seems so shallow and empty at times. Halacha sends the Jew back into slavery every year (or perhaps it would be more correct to say that Halacha recognizes that man slips back into slavery every year), so that he can be liberated anew. Freedom is a journey, a station on the road, and without the experience of liberation, without the living memory that NOW you have just left the house of bondage, you are not really free.
“If you do not free yourself every year, you slip back into subjugation – one either increases freedom or becomes enslaved. At the very beginning of the Seder, we cite a halachic ruling: ‘The more one tells the story of the exodus, the more meritorious it is.’ Freedom is an inner struggle, a process, a path, not a static state; and the more one relives the moment of liberation, the farther one travels on that path.”
Independence
For those who want true financial freedom and independence, now is the time to clean up your portfolio and get back to basics. Investors should use this time of the year to clean up messy portfolios. In fact, it is probably more important than cleaning your windows – where there is no hametz.
Go back and reassess your financial goals and dreams of how you would like your future to look, and then create a financial plan to get yourself back on track to achieve your goals and dreams.
Once you have defined your goals, it’s time to look at your portfolio. Have you skewed from your optimal asset allocation? Is your portfolio a hodgepodge of random stocks that were bought on a whim but with no underlying strategy?
Be smart about your investments. Pick a strategy and stick with it. Owning random stocks with no strategy is a recipe for disaster. Even though you may have emotional reasons to hold onto certain positions, now is the time to put emotions aside and be more rational. Asset allocation is the best way for most investors to grow wealth.
According to John Bogle, Vanguard’s founder and preacher of long-term passive investing: “One of my favorite rules is ‘Don’t peek.’ Don’t let all the noise drown out your common sense and your wisdom. Just try not to pay that much attention, because it will have no effect whatsoever, categorically, on your lifetime investment returns.”
Like moving from slavery to freedom, there is no shortcut to building wealth. It’s a process. The way to build wealth is to buy quality assets and hold them over time. In addition, add money to your account whenever possible. By allowing the wonders of compound interest and the growth of the stock market to do their thing, over time there is a good chance that you will achieve financial freedom. Enjoy your cleaning! The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc., or its affiliates.