One of the most common questions I get asked is, “my customer invested in Global Real Estate, Chinese equity or some other fund 2 years ago and is in losses. What should I do? Should I sell the fund and buy something better” ?

The answer to this question can be found (in part) on the back of a box of cake mix. The recommended baking time is around 30 minutes. If you examine the cake after 10 minutes it will be a sticky blob not at all resembling a cake. Most of us know this.

In the UT/ILP Investment Sales Master Class we share with advisors that the probability of losing money in equity funds is very high for short periods of time like 2-3 years. Just as 10 minutes is not enough to bake a cake, 2-3 years is definitely not a correct investment horizon. As a financial advisor we should in fact prepare the customer for this possibility and remind them that the correct holding period is 10 years. In addition to the correct holding period there is one more very important ingredient for investment success. That, however, is not found on the back of a box of cake mix.