Kenneth Orr on the Merits of Common-Sense Investing

Kenneth Orr is a New York-based financial professional. He is the founder and Chief Investment Officer of KORR Acquisitions, a company focused on value investing. As a successful financier, Kenneth Orr is uniquely positioned to help the average investor in Brooklyn understand the fundamentals of the market today.

Kenneth Orr, who has previously invested in a sugar company in the Red Hook neighborhood, recommends that his clients in Brooklyn look at investment through the lens of common sense. While algorithms and computer programs can play a role in sensible investment, it’s possible that the average investor can be caught up in the trappings of this technology and become distracted from the fundamentals of financial success.

Even though the financial world can be incredibly complex, common-sense guidelines can serve as a blueprint for your decision-making. When it comes to the essentials, investment success breaks down to three simple principles.

1. Diversification

No investor should pack their portfolio too heavily with any one type of investment. It is wise to structure your portfolio so that you will not be subject to the whims of any one portion of the market. Each investor should structure their portfolio according to the expected risk and annual rate of return they wish to receive. Diversification can help to insulate your portfolio against losses and give you a more balanced strategy for success.

A good rule of thumb for conservative investors is to keep roughly half of your portfolio in bonds or other fixed-income investments.

2. Savings for Life

Many people spend too much time on the fine details of their portfolio while ignoring one of the most important principles of making money. In order to invest money, you must save in your daily life. Restrict unnecessary purchases and always keep your overall financial goals in mind. When you receive a raise or windfall, invest that in your portfolio. Self-discipline will help you grow your portfolio over time. Becoming distracted by the hype in news articles and on television will only get in the way of sensible investing.

Your long-term financial plan should be structured based on your goals for the future. Most people invest in the market because they want to save money for retirement. It is wise to adjust your goals based on the amount of time you have to keep your money in the market.

3. Don’t Try to Beat the Market

Rather than aggressively making changes to your portfolio to meet the daily ups and downs of the market, take a longer-term approach. The daily fluctuations of the market are too much for an average investor to be concerned with. When the average investor is drawn into the drama and change of the stock market, for example, he or she might make unwise choices based on the emotions of the moment. Try to take the emotions out of your market decisions and operate based on hard numbers. Trying to “beat the market” may make you money in the short term, but it can be gone just as quickly when the market turns the other way.

Value investing or concentrating on stocks that may be undervalued is an excellent, low-risk strategy for growth. These stocks may make modest gains, but they can be a great addition to your portfolio.

Don’t Make it Too Difficult

When you keep these three simple principles in mind, it will be much easier to manage your money. A qualified investment advisor like Kenneth Orr can help the investors of Brooklyn learn to manage their money with simple, common-sense methods. Overcomplicating the stock market is not necessary, and it may cause you to lose money in the end.