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June 16, 2011, 12:01 a.m. EDT
By Chuck Jaffe, MarketWatch
BOSTON (MarketWatch) -- It was Morningstar Inc.'s biggest conference ever, in terms of attendees and marquee names on stage. Some 1,600 individual investors, financial planners and money managers gathered in Chicago last week to listen to the best and the brightest "” including Pimco chief investment strategist Bill Gross and BlackRock chief executive Larry Fink "” talk about the pressing financial issues of the day.
Having been at a majority of the 23 yearly Investor Conferences that Chicago-based Morningstar /quotes/zigman/86514/quotes/nls/morn MORN -0.58% has hosted, the record turnout and the talks were impressive. The mood was changed a bit from last year, when the money managers all seemed flush with stocks they expected to do "great" in the future; this year optimism was muted, and most of the money managers were reduced to a list of names they thought were "good."
If you missed the conference, you can live without the details of the speeches, the occasional stock tip, and the inner workings of various portfolio-management strategies.
What you can't live without are the questions that arose through the various sessions, ones that individuals "” hearing the tone and tenor of experts who are nervous about the direction of the market "” should be asking themselves about their own portfolio and money-management style.
Here are the questions that, as the conference unfolded, I thought every investor should be asking themselves now. Take a look, and then answer the questions honestly for yourself.
1. Which markets do I invest in, and which should I avoid?
There are a lot of ways to invest. You can make it as simple as owning total-market stock and bond index funds and tinkering with the mix, or you can own multiple funds in every asset class and category.
For individual investors, however, the key to any investment may be the thesis behind it "” the reason for taking a chance in commodities, emerging markets, or domestic stocks.
While someone is telling a good story for virtually every sector or corner of the world, you need more than an optimistic sales pitch or you will change your mind and chase returns elsewhere the minute one strategy seems the least bit off.
In market times as uncertain as now, there's probably nothing as important as knowing what you are comfortable owning and holding through the turbulence, and what makes you nauseous.
2. Which markets do I know well enough to invest in on my own?
At virtually every Morningstar session, there were some great investment ideas that someone might hang their hat on. But there's a difference between loving a story and making it work for you.
So if you get excited about the economic future of, say, Brazil, you need to decide if you want to invest specifically in that market, or whether you want to get your exposure through something more diversified, such as a fund that focuses on the BRIC nations (Brazil, Russia, India and China).
Moreover, if you are the type of investor who wants to do it yourself, you need to decide if you believe you really can do better than a pro, who at least has the resources to diversify widely and minimize pain if one investment decision goes wrong.
"5 questions every investor should ask now http://on.mktw.net/iqqJRK" 11:07 p.m. EDT, June 15, 2011 from MKTWJaffe
"Mutual funds get a tough report card http://on.mktw.net/mege8n" 11:19 a.m. EDT, June 12, 2011 from MKTWJaffe
"Mutual funds lose their battle with ETFs http://on.mktw.net/mnymXD" 1:27 p.m. EDT, June 8, 2011 from MKTWJaffe
"Investors need to take a chance on risk http://on.mktw.net/mEZSB9" 11:39 a.m. EDT, June 5, 2011 from MKTWJaffe
"Stock touts prey on inflation fears http://on.mktw.net/k7EA1t" 4:36 p.m. EDT, June 3, 2011 from MKTWJaffe
Chuck Jaffe is a senior columnist for MarketWatch. Through syndication in newspapers, his "Your Funds" column is the most widely read feature on mutual fund investing in America. He also writes a general-interest personal finance column and the Stupid Investment of the Week column. Chuck does two weekly podcasts for MarketWatch, and frequently makes guest appearances on television, and on radio shows across the country. He is the author of three personal-finance books. His latest, "Getting Started in Hiring Financial Advisors," was published in the spring of 2010 by John Wiley & Sons.
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