Yes, investing is sort of a marathon definitely. But it’s a marathon that requires you to check your running direction on a regular basis.

Going with big cap, well-known companies is a safer way to play the market certainly. But remember that small cap out-performs large cap in the long term.

The panel consisted of four portfolio managers that were flown in from around the country. The meeting happened a few weeks after Asian stock markets took a tumble, with for example the Indian stock market dropping by 10 percent in a single day. Shares in the fund of one of the panelists who ran an emerging markets fund were down significantly.

Besides the great free food and wine, one encounter stands out in my mind of this evening. An older investor aggressively questioned the manager of the emerging markets fund, complaining loudly about its steep decline. He brushed aside the advice of his Fidelity representative to “be patient” and wanted to stem any further declines. First, he clearly failed to understand the asset class in which he was investing. Emerging markets have greater volatility than stocks on the NYSE for example. The volatility is demonstrated by occasional steep declines in these markets each year for the past decade or so. The markets often recover but there is tremendous uncertainty in the meantime. A five-year chart of this fund would have shown this. The other silliness that I saw first hand is that most investors, like this man, cannot resist the temptation to do nothing and buy and sell more than they should. The encouragement given to have patience falls on deaf ears with folks buying high and selling low. Today, about six months after this gathering, some Asian markets are at or near record highs and emerging markets funds are up smartly.

Finally, the panic in his voice suggested that he really had not thought through how and why his assets were allocated the way they were, the risk exposure of this allocation, and how this allocation would assist in achieving a particular investing goal. For someone as he was with substantial assets invested, it is far too easy not to take responsibility over one’s investments and then wonder what happened. Most mutual fund investors, I have come to realize, don’t even know what their fund invests in and decide if they would actually buy these stocks themselves. To make it to a million, I recognized a couple of years ago that it would be necessary to fully understand what I was investing in and why and what asset classes on which I wanted to focus my attention. If one is concerned about risk, don’t allocate so much money toward that position.

The reality is that you can beat the market (with lower risk, or at least less volatility in returns) in order to do so you need to focus your portfolio on the few best baskets. The challenge is finding them and not overpaying to put your eggs there. But this is the essence of investing – making sure that you don’t rise and fall with the tide, but that you make money no matter what happens.