Do You Know Your Investment Personality? INTRO: Many investors assume that the surest way to gather wealth is by following the pronouncements of Wall Street pundits. Others feel they can research and select investments on their own. Bruce Hagan, certified financial planner with RAI Investments and Corporate Securities Group is here to explain some steps you should take prior to making any investments. Q1: We’ve talked in the past about the importance of the various steps of financial planning that people should take prior to making any investments. Can you recap some of those quickly? A1: Certainly. We’ve talked about evaluating your life goals, your risk tolerances, creating an asset allocation model, the importance of diversification, etc; but there’s another very personal side of successful investing I’d like to discuss today that deals with the psychology of investing, especially with the stock portion of one’s portfolio. Q2: Don’t tell me we’re going to review the works of Sigmund Freud! A2: Nothing that deep. There’s been for some time a school of thought that investors should follow their own interests, intuition and behavioral characteristics in choosing the type of investment vehicles to employ. Q3: This sounds like the theory of famous fund manager Peter Lynch who says buy stocks of companies whose products you like. A3: That’s part of it. We’re exploring somewhere between Peter Lynch and Freud I guess. I’m talking about knowing your investment personality. A fellow named Derrick Niederman has written a book titled, "The Inner Game of Investing." He and others feel it’s important to recognize important aspects of your personality when investing. Niederman has identified seven personality types. Q4: I hope you’re going to describe these. A5: I’m going to tell you the seven and which categories of stocks are closely associated with each. First, there’s "bargain hunters" who would be drawn to value investments. Next are "visionaries" who are better off choosing growth stocks. "Contrarians" are associated with turnaround situations, "sentimentalists" with blue chips, "skeptics" with short sales, "traders" with short-term volatile opportunities and "adventurists" with speculative stocks and options. Q5: Now, should we try to pigeonhole ourselves to one of these categories for our entire stock market life? A5: Of course not, but the importance of this is to identify those types of stocks one is going to be more comfortable holding. A "bargain hunter" or a "contrarian" probably won’t really be happy buying the stock that’s been rapidly rising, hoping to catch some of that ride regardless of how attractive it may appear. However, that may be exactly what the "visionary" or "adventurist" is looking for. Q6: So, the lesson is know thyself and invest accordingly. A6: That’s right. Different strokes for different folks. The discussion offered above and in the movie should not be considered an endorsement by Florida State University. They are offered in the educational sense of providing thought-provoking information for our Web audience. Copyright shared with Florida News Channel (FNC), all rights reserved. Broadcast 11/12/99