So, I’m going to take a wild guess and assume that if you’re reading this then you’re a human being.
With the advancements in technology these days, you can never be certain. As humans we have the ability to think, reason, have feelings, emotions, and communicate.
Guess what! I’m human too.
So that puts on common ground.
Now, this does mean that our brains are wired to keep us feeling comfortable and safe, not to make investment decisions that go against the heard. Our DNA isn’t wired for investing.
Humans tend to be emotional; we respond in irrational ways when we feel threatened, we overreact, we are easily distracted by things that are shiny at times that we should be focused on the boring and we hate to have uncertainty in our lives. We face this fundamental truth every day in the markets.
And to make things worse our world is, without a doubt, committed to pushing us over the cliff into investment failure. Investing for the long term is meant to be boring. Unfortunately, our brain longs for the exciting, and most of the investment news out there should be nothing more than noise to the long-term investor.
It’s loud and exciting but its also a damaging distraction for most of us.
Nobody was born with the temperament needed for successful investing. Not Warren Buffet, not Charles Munger not any of the TV personalities in the Business News Media and certainly not me.
When we were entering the beginning of March there was a brief moment when I said, “What if this as it?
What if this was “The Big One”?
What if this was the event that brought upon us “Financial Armageddon”?
I’m not immune to those emotional thoughts and neither are you but let me add: It’s ok. You’re not required to be immune to emotion.
It’s OK to not be OK.
Honestly, it’s more than just OK.
It forces us to refresh our perspective and reevaluate our plan. It allows me to experience, even just for a short minute, the emotions and thoughts our clients may be experiencing.
My Financial Services career has shaped into helping people fight against the natural instincts that could be extremely damaging to their financial plan. I feel that it’s my responsibility to coach people on how to not make that big mistake that can undermine their financial future. The difference between giving into those human emotions and fighting against them can be huge. It’s just might be the difference between investors achieving their goals and not.
Refusing to act on perfectly natural but completely inappropriate human impulses is the very essence of what I do. I find that for me to coach people through it I still need to feel those myself.
“What counts for most people in investing is not how much they know, but rather how realistically they define what they don’t know.” – Warren Buffet
Smart investors understand that its OK that they don’t know everything. The “Experts” don’t and either does the Investment Media. Once we understand the limits of what we know and comprehend, we can then focus our time and energy on what matters most – those things we can control.
Many investors spend their time and energy on speculating on market outcomes and public policy. We spend our time and energy on things that are always changing and we’re unable to predict.
What we should be doing is spending our time and energy on things that don’t change – Human nature for one. What we need to focus on is what we can do today so that we respond in an appropriate way to whatever happens tomorrow.
So, I’m focusing on how to help the families we work with, ignore the noise, hold onto the proper perspective, and improve on their financial decisions. Teaching them behaviors to help them fight against our natural instincts to allow the news and moves in the market to influence us and short-circuit our financial plan.
After all, we are only human.
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Securities offered through LPL Financial, Member FINRA/SIPC The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.