Caroline Ritchie: Start year with a smile

Investing with a positive mental attitude can have dramatic effects.Consulting the most accurate modern mood barometer of society, Facebook, it is clear that last year is one we wish to forget.

"Goodbye 2011, you sucked!" was the overwhelming thematic. Phew, it's done; we can all stop crying into our pretzels. A year of disbelief, disengagement and natural disasters is now at our heels. It's time to finally get over our market perma-shock.

The intrinsic problems behind many of the world's economies remain no different from where we left them last year. Our future positive reactions are the only things that count.

We're well seasoned in volatility, flash crashes, Euro-prophecies and dare I say it the recession here at home nobody quite wants to admit to. I say ask the shopkeepers, the chaps on the ground, the best indicator you'll ever get of how the economy is performing. Ask the innkeepers, some of them are more economically tuned in than any treasury boy.

You'll get the same refrain from most Kiwi retailers - 2011 was notable for all the wrong reasons. Excellently, and the reason why we have global commerce in the first place is that humans are hard-wired to keep going. Being optimistically wired-in is surely what 2012 will be all about.

If you can get all the way up the scale to exuberance, chances are you'll be wildly successful.

One of the very definitions of success is doing the things that others don't like to do. Putting on a happy face and greeting every customer with a cheery jingle may not instantly transform your shop, (though it certainly can't hurt), but investing with a positive mental attitude can have dramatic effects.

It is something I always harp on about and probably will continue to: the markets are a psychological construct of man.

We are, at our base level, a social animal who feels safety in numbers, and for some reason reassured when doing the same things as everyone else. Following trends in stocks is fine, if you get in and out early.

Humans overshoot things, particularly when events are going well: it is in our genetic material to do so. But without that pre-programmed ability to push the limits we would face a stalled evolution.

Maybe this factor is what separates those who constantly weep into their potato chips from those getting on with the business of re-arranging their portfolios to suit the conditions.

The portfolio owner accepting of the environment in which he operates and willing to seek solutions is a mini business owner in his own right. Would you keep on a bad employee in your own company after years of sub-standard work? Unlikely when there are keen apprentices with better skills and prospects at your fingertips. Why get all negative over the bad apple? They can be replaced with someone of a sunnier disposition. Goodbye negativity, you've had your year.

Caroline Ritchie is an Authorised Financial Adviser with Forsyth Barr in Napier. To contact an Investment Advisor call 0800 367 227. This column is general in nature and should not be regarded as personalised investment advice. Disclosure Statements are available on request and free of charge.