Kick Goals Fatigue to the Curb With 5 Simple Tips
January is a popular time to set big goals. “This year I want to… This year will finally be the year I… This is my year…
The year you what?
Write a book?
Start your business?
No matter what your personal goal is, and no matter how much enthusiasm you have for it on January 1st, fatigue ultimately sets in. Only a short time into the new year, I’ll bet your goal that had you jumping out of bed a few weeks ago, now feels like a lot of work. Combined with slow progress, it’s tempting to give up or adjust your trajectory. Do not give up just because it feels too hard before you read on.
Why Many Goals Fail and What You Can Do to Avoid It
For most people, the issue isn’t that the goal is too big, it’s that the path forward is cloudy. They set the goal, often verbally or sometimes in a journal and then go for it. The problem is that the “going for it” isn’t a plan and ends up looking a lot like sitting on the stationary bike at the gym. You clock up miles but don’t move and inch.
A Map is Key to Beat Goals Fatigue and Create Success
A Goals Map is essentially your stairway from street level to the top of the building. It puts on paper not only your BIG goal but also creates a tangible path forward. Moreover, it gives you interim milestones and successes to celebrate along the way. The celebration is essential to keep up your momentum and motivation – after all, the top of that building is a long climb.
What is a Goals Map?
A Goals Map is a lot like any other map. It takes you from point A to point Z and helps you to plot your stops along the way. On a long road trip, there are often detours that open up new pathways and sustain the adventure. With a Goals Map, you can incorporate those turn offs and visualize how they will help you get to your final destination too.
At the simplest level, when building your Goals Map, you start with a goal in mind and fill in the boxes from your starting point to the end goal. Think of it not as a stone tablet or work plan but more like a treasure map. Once you reach each spot on the map, it makes the step to the very next box clear.
The Y-Axis, (Vertical) is your path to your primary goal.
The X-Axis (Horizontal) is where you can further flesh out steps from your primary goal (Y) and set additional goals that are related your original path.
Here’s a sample for someone who wants to turn their side hustle into a full-time business. You’ll notice that not every single step is represented at a granular level, but the map outlines a clear path forward.
5 Hot Tips for Using Your Goals Map to Kick Goals Fatigue to the Curb
1. Write It Down
Do not create the goals map in your head. Grab a notebook or your favorite online app and sketch it out. When you write down your goals, studies have shown that you increase your chance of reaching them.
2. Focus on Your Next Step
It can be tough to know all the steps between where you are now and your goal. When you are building your goals map, in each box ask yourself, “What’s my next logical step?” and don’t worry about four steps from here.
3. Build It From the Top Down or the Bottom Up
A trick you may want to use is to build your map from the top down. Ask yourself, “What needs to happen right before this is possible?” Decide what works for you – top down or bottom up and don’t worry about the way most people do it.
4. Post It
Now that you have your Goals Map put it somewhere you can see it and refer to it. There’s no point in writing it out if you never look at it again. Post it somewhere that you can refer to it and be reminded of where you are in the process.
5. Color It in and Check It Off
It’s powerful to see your progress and easy to feel like you aren’t making any. Use your map to help visualize progress. When you’ve completed a step, color it, check it off or put a pin in it. Equally important, don’t forget to celebrate.
Goals fatigue can stop you from creating the life and work that you most want. Instead of giving up and getting in bed or waiting for December for talk of “next year,” try a Goals Map. It works.
Alternative Beta Strategies: Alpha/Beta Separation Comes to Hedge Funds
Written by: Yazann Romahi, Chief Investment Officer of Quantitative Beta Strategies, J.P. Morgan Asset Management
A quiet revolution is taking place in the alternatives world. The idea of alpha/beta separation has finally made its way from traditional to alternative investing. This development brings with it a more transparent, liquid and cost-effective approach to accessing the “alternative beta” component of hedge fund return and a new means for benchmarking hedge fund managers.
The good news for investors is that the separation of hedge fund return into its components—rules-based alternative beta and active manager alpha—has the potential to shift investing as we know it. These advancements could democratize hedge funds and, at long last, make what are essentially hedge fund strategies available to all investors—even those who aren’t willing to hand over the hefty fees often associated with hedge fund investing.
A benchmark for alternatives
With respect to traditional equity investing, we have long accepted the idea that there is a market return, or beta—but this hasn’t always been the case. Investors used to assume that to make money in the stock markets, one needed to buy the right stocks and avoid the wrong ones. The idea of a market return independent of skilled stock selection seemed ridiculous to most market participants. Yet today, we would never invest in an active manager’s strategy without benchmarking it against its respective beta.
Interestingly, hedge fund managers have been held to a different standard. Investors have been much more willing to accept the notion that hedge fund strategy returns are pure alpha, and that their investment returns are based entirely on the skill of the fund manager. That notion explains why investors have been willing to accept a “two and twenty” fee structure just to access what has been perceived as one of the most sophisticated and powerful investment vehicles available.
In thinking about the concept of beta, consider its precise definition—the return achievable by taking on a systematic exposure to an economically compensated risk. In traditional long only equity investing, the traditional market beta has been further refined as a number of other risks have been identified that are commonly referred to as “strategic beta.” These include factors such as value, momentum, quality and size. But no one ever said that these risk factors must be long-only.
Over the past decade, as more hedge fund data became available, academics began to disaggregate hedge fund return into two components: compensation for a systematic exposure to a long/short type of risk (alternative beta), and an unexplained “manager alpha.” What they found is that a significant portion of hedge fund return can be attributed to alternative beta. That fact has turned the tables on how we look at hedge fund return. With the introduction of the alternative beta concept, hedge fund managers will have to state their results, not just in terms of total return, but also as excess return over an alternative beta benchmark.
Merger arbitrage—an alternative beta example
The merger arbitrage hedge fund style can be used to illustrate the alternative beta concept. In the case of merger arbitrage, the beta strategy would be the systematic process of going long every target company, while shorting its acquirer. There is an inherent return to this strategy because the target stock price typically does not immediately rise to the offer price upon the deal’s announcement. This creates an opportunity to purchase the stock at a discount prior to the deal’s completion. The premium that remains is compensation to the investor for bearing the risk that the deal may fail.
Active merger arbitrage managers can add value by choosing to invest in some deals while avoiding others. Therefore, their benchmark should be the “enter every deal” strategy, not cash. In fact, the beta strategy explains the majority of the return to the average merger arbitrage hedge fund. And it doesn’t stop there. Other hedge fund styles that can be explained using alternative beta include equity long/short, global macro, and event driven. Note that the beta strategy invests in the same securities, using the same long/short techniques as the hedge fund strategy. The difference is that the beta strategy is a rules-based version that can become the benchmark for the hedge fund strategy. After all, if a hedge fund strategy cannot beat its respective rules-based benchmark (net of fees), an investor may be wiser to stick to the beta strategy.
Implications for investors
What does all this mean for the end investor? Hedge funds have traditionally been the domain of sophisticated investors willing to pay high fees and sacrifice liquidity. Alpha/beta separation in the hedge fund world means that investors can finally choose whether to buy the active version of the hedge fund strategy or opt for the passive (beta) version. Hedge fund strategies can be effective portfolio diversifiers. Now, through alternative beta, virtually all investors can access what are essentially hedge fund strategies in a low cost, liquid, and fully transparent form. For investors who haven’t had prior access to hedge funds, this could be welcome news. Not only can investors look at an active hedge fund manager’s strategy and determine how it has done compared to the systematic beta equivalent, they can also invest in ETFs that encapsulate these systematic strategies.
When looking at one’s traditional balanced portfolio today, there are plenty of questions around whether the fixed income portion will achieve the same level of diversification it has provided in the past. After all, with yields still low, there is little income return. Additionally, the capital gains that came from interest rate declines are likely to reverse. With fixed income unlikely to adequately fulfill its traditional role in portfolios, there is a need to find an alternative source of diversification. This is where alternative strategies may help. For investors seeking to access diversifying strategies in liquid and low-cost vehicles, alternative beta strategies in ETF form are one option.
Looking for an alternative to enhance diversification in your portfolio?
For investors looking to further diversify their overall portfolio, JPMorgan Diversified Alternatives ETF (JPHF) seeks to increase diversification and reduce overall portfolio volatility through direct, diversified exposure to hedge fund strategies using a bottom-up, rules-based approach.
Learn more about JPHF and J.P. Morgan’s suite of ETFs here.
Call 1-844-4JPM-ETF or visit www.jpmorganetfs.com to obtain a prospectus. Carefully consider the investment objectives and risks as well as charges and expenses of the ETF before investing. The summary and full prospectuses contain this and other information about the ETF. Read them carefully before investing.
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