By Douglas Goldstein, CFP®

When Ron, the instructor at Maslulim’s advanced driving course (www.maslulim.co.il), introduced the idea that drivers normally follow their instincts, he said that such reactions are usually wrong. He stressed that training can help refine your actions to prevent a crisis. This concept also applies in investing.

When should I slam on the brakes?
Maslulim teaches that in the face of danger, you should slam on the brakes with full force, even if you’re afraid to do so. Today’s advanced ABS braking systems allow you to control the car even as you come skidding to a halt. But with stocks, it’s different. While it may be instinctive to pull the brakes when faced with a crashing market, selling in a panic may not be your best move.

What is even better than slamming on the brakes is looking ahead and foreseeing the danger. Create a financial plan and/or rebalance your portfolio as needed. Then hopefully you won’t need to battle the urge to sell when the market crashes.

The Maslulim instructor also pointed out that your side mirrors should tilt out further than they are normally set. This allows you a wider perspective on the cars coming up beside you, providing a better a sense of what is about to happen. Knowledge is empowering, but when it comes to both driving and investing, past performance can’t predict the future. While yesterday your neighbor stopped at the red light, you can’t assume he’ll stop today, so be prepared for all alternatives. Similarly, past investing history can’t predict future returns, so plan for different scenarios.

Maslulim’s course made me a better driver, and I strongly encourage all drivers … even if you’ve been driving for decades … to sign up now. You’ll be amazed at how much you will learn, and how much fun you can have. After all, not crashing your car is a good investment decision. After you’ve fine-tuned your driving, fine-tune your investment portfolio. If you feel you’re not driving your investments well enough, you can also take a course or speak to a professional financial adviser to get you back on track.

Douglas Goldstein, CFP®, is the director of Profile Investment Services. He is a licensed financial professional both in the U.S. and Israel. He offers securities through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, NFA, SIFMA. Accounts carried by National Financial Services LLC. Member NYSE/SIPC, a Fidelity Investments company. His book is available in bookstores, on the web, or can be ordered at: www.profile-financial.com (02) 624-2788 or (03) 524-0942.