New financial year: Look forward and back

Taking time out to reflect on the past and thoughtfully plan for the future may not be trendy, but it’s the only way to truly improve.

Many of us are preoccupied with how to improve ourselves in the new year: be nicer to our fellow man, give more charity, pray with better concentration, learn more Torah, etc. We focus our self-improvement not just on what we can do better in the upcoming year, but also by looking back and understanding where we fell short of our goals. In today’s fast-paced, livingfor- the-moment culture, taking time out to reflect on the past and thoughtfully plan for the future may not be trendy, but it’s the only way to truly improve.
Rabbi Abraham J. Twerski has a great example to illustrate this point: “Is it coincidence that our generation is infatuated with digital watches and clocks? Old-fashioned timepieces told time by a pointer, which had the past behind it and the future in front of it. These timepieces symbolized an awareness of both, but a digital display focuses exclusively on the present moment and gives no recognition to the existence of either the past or the future. While we should not allow the burdens of the past nor the anxieties of the future to exert a destructive effect on our living, the constructive lessons of the past and a responsible attitude towards the future can guide us to a proper and responsible life.”
As we tend to spend most of our time preparing ourselves spiritually for the new year, now is a perfect time to use many of these same principles to get our finances in order as well. Don’t think that reviewing the past is for spiritual improvement only. Taking the time to review your investment moves and strategies of the last year may help you become an improved investor.
Do you overtrade? The culture of instant gratification is also played out in the arena of investing.
Turn on the TV, check your e-mail inbox, or even go to a synagogue Kiddush, and you are likely to hear about “hot stocks” that will make you rich in a very short time. Who needs to own a stock that increased by 8 percent in value and pays a nice dividend when you can own the next Google or Microsoft? What inevitably happens is that investors tend to quickly buy a “hot tip” – only to then sell it as soon as the next “tip” comes along that they must buy. The investor will never enjoy the steady increase in value of truly “hot” stocks if he’s always selling in order to buy something else.
The way to make money over the long run in investing is by sticking to a strategy.
Isn’t it strange that with all the transparency to be able to see exactly what top investors are buying and selling, and even read why they are making the moves that they are, that investors who try and copy them are unsuccessful? Two university research papers on the subject both came to the same conclusion: Investors lack the discipline to exactly follow what the “top investors” are doing. They start interjecting their own analysis into the equation, don’t buy or sell all the same stocks, and ultimately underperform the market.
Have a plan Investors need to look forward as well.
You need to understand what the point of your investment is for. Whether you invest to fund your retirement, to pay for children’s weddings, to leave an inheritance for the next generation, or a combination of these reasons, understand your goals and invest with them in mind.
Due to the emphasis placed on it by the financial media, investors often pay too much attention to performance and too little attention to why they are investing.
If you need your money in a year or two to pay for a wedding, you may have to accept getting a small, guaranteed return on your investment, as opposed to “trying to beat the stock market.”

Stock-market gyrations and returns are almost irrelevant to an investment portfolio with a short-term horizon and where principal protection is the ultimate goal. If you understand your goals and you invest with an eye on meeting them, your chances of success will be much greater.
May we merit a happy and healthy new year – and some successful investments would also be nice!
Aaron Katsman is a licensed financial adviser in Israel and the United States who helps people open investment accounts in the US.