The Dilemma of “Paying Attention”

As I stated in my recent interview with Moving America Forward host Doug Llewelyn, one of the biggest challenges in anyone’s life is to go from working, receiving a paycheck, and saving money your whole life….to no longer receiving that paycheck for the work you do.

And, to make matters worse, you then have to begin “spending” the money you’ve taken your entire life to save.  That just doesn’t feel “normal” to anyone.  In fact, it feels strange!

What I’ve witnessed coaching retirees over the last 25 years is that in order for you to begin spending the money you’ve saved over your lifetime, and truly enjoy yourself, it requires a lot of financial confidence.

In years past, when guaranteed monthly pensions were the norm, you could retire confidently knowing the precise amount of monthly income you could count on for the rest of your life.

In today’s world, however, guaranteed monthly pensions are almost nonexistent in the private sector.   401(k)s and 403(b)s are the norm today, and it’s your job to determine if you’ve enough saved to provide the income you need for the rest of your life.

It’s then your daily job to manage your money to provide the lifestyle sustaining income you need without running out.

That’s quite a daunting task!

What To Pay Attention To?

In light of this daunting lifelong task, one of the questions I receive a lot as The Retirement Coach is “what should I be paying attention to?”

It’s a very good question that has become more and more prevalent today given 24/7 media coverage of financial markets.

It has become harder and harder to determine what’s relevant, what to pay attention to, and who’s correct!

Let’s say, for example, that you want to “stay on top of things”, a valid desire that many feel they should be doing as a responsible retiree in today’s day and age.

And, in order to do that you read the financial newspapers.  You listen to market updates.  You watch the news on television, and you click in and follow financial websites like Yahoo Finance, Market Watch, and MSN Money.

Had you done this on the random morning of Tuesday, October 28, 2014 and were on The Wall Street Journal’s MarketWatch.com home page, here are the exact headlines and bullet points you would have come across in your quest to satisfy your desire to “stay on top of things”:

  • Stock Futures Up on Hopes for Fed, European Gains

  • S&P to Gain 10% in 12 Months: Goldman Sachs

  • Pursche: After a Drop, Stocks are Going Up

  • What To Make of This Roller Coaster Market

  • 3 Reasons to Expect a 30% Market Meltdown

  • European Stocks Rebound

  • What’s Next for China’s Foreign Reserve Fall?

  • Protect Your Portfolio with These 5 Basic Hedging Strategies

  • Elon Musk Warns of our ‘Biggest Existential Threat’

  • Home Prices See Largest Annual Jump Since 2005

  • Fed Will Hold Market’s Hand as it Ends QE3

  • Don’t Let a Downturn Undermine Retirement

  • Buffet Still Optimistic About America

  • Hulbert: Be Ready for a June Swoon in the Markets

  • Why Dow Transports Index is a Crystal Ball

  • How to Retire Early – 35 Years early

  • 10 Stocks to Buy

  • Best Performing Mutual Funds

Please take a moment to go back and re-read those again.

These are the exact headlines that appeared that morning.  I couldn’t make them up if I tried!

Do you notice a pattern?  If so, what is it?

Pattern #1

If you step back and remove any sense of emotion, and objectively read them for a moment, the first thing you’ll notice is that they’re not facts.

They’re ALL opinions.

Even the first one which states that stock futures are up.  That may be a fact, but suggesting that all stock futures prices are up due to hopes for Fed and European gains is an opinion.

Are there only two potential reasons why millions and millions of investors all around the world have driven up demand for stocks before the day’s trading session begins?

Of course not!  But, they can’t list dozens of potential reasons and fit them into a concise headline as their editors require.

This is a very important point.  Due to space and time limitations, and of course our limited attention spans, all forms of media have to severely condense the information they put in front of you.

By definition, that means they either have to generalize to provide the broadest possible view, or be very subjective and only isolate one facet of the story.

This is a really important point to internalize.  Without giving it much thought, writers’ subjective opinions are interpreted as “fact”.

Because they’re “in print”, we’re conditioned to acknowledge them as fact.

Pattern #2

The second pattern you can’t help but notice is that these headlines are written, individually and collectively, to conjure up a visceral feeling inside of you that the world is completely out of control, that financial markets could come crashing down at any moment without notice, and that, in turn, your financial future is on thin ice.

And, the only rational conclusion you should come to is to continuously “tune in” and pay attention so you don’t miss out and get burned.

Try to read this selection of headlines again without feeling this way:

  • What To Make of This Roller Coaster Market

  • 3 Reasons to Expect a 30% Market Meltdown

  • What’s Next for China’s Foreign Reserve Fall?

  • Protect Your Portfolio with These 5 Basic Hedging Strategies

  • Elon Musk Warns of our ‘Biggest Existential Threat’

  • Don’t Let a Downturn Undermine Your Retirement

  • Hulbert: Be Ready for a June Swoon in the Markets

  • Why Dow Transports Index is a Crystal Ball

Remember that the financial media can choose to say anything they want to say.  Within very broad guidelines, they have total freedom.

If that’s true, why would they choose to write THESE headlines and bullet points over every other possible alternative?

With no disrespect to their way of making a living, the reason is because they’re not in the business of managing money or providing advice.

That’s not how they’re compensated.

All forms of media are compensated through advertising revenue.  Companies around the world pay billions of dollars to run advertisements to market their businesses.  And, they have an infinite amount of choices these days.

How do all of these companies determine where to spend their advertising dollars?

They spend it where they believe they can reach the largest audience.

So, the goal of every financial media organization is to have the largest audience in order to entice every potential advertising customer (company) that they have the largest audience for the advertising customer to reach with their message.

Given this, they pay professional copywriters (not money managers) very, very well to write headlines and “teaser copy” that will continuously capture and maintain your attention.

And, they do a brilliant job of it.  Go back and read the list of headlines again and rate them on a scale of 1 to 10 on their ability to capture your attention.

I think you’ll agree that most of them score a 10!

Next Three Questions

1. As a result of reading these headlines, do you feel as though your desire to “stay on top of things” has been satisfied?

2. Did you reach any financial conclusions that you were able to act on?

3. Have any or all of them helped increase your financial confidence?

I think it’s safe to say that your answers are No, No, and a resounding No!

(If that’s true for you, then you have to really question why you’re paying attention in the first place.)

You have to remember that having you answer “YES” to these questions is not the financial media’s goal.

Their goal is viewership, period!

Increased and sustained viewership means higher ratings.  Higher ratings mean higher advertising revenue.  Higher advertising revenue means higher profit.

I don’t discredit the financial media as a business venture, nor do I question their right to do what they do to make a living as long as they don’t use force or fraud to get their results.

My interests are in helping you develop and maintain the highest possible level of financial confidence so you can do everything you’ve always wanted to do in your retirement years without worrying about money.

Unfortunately, the financial media’s goals are not aligned with your goals.

You have to really ingrain that in your mind at all times if you want to be effective.

The Solution

For maximum effectiveness, the solution to this ‘dilemma’ we’ve been pondering is one I learned from Dr. Maxwell Maltz many years ago.  He summarizes it in the description of his book, Psycho-Cybernetics :

“What we’re striving for is the accurate, calm, and ultimately automatic separation of fact from fiction, fact from opinion, actual circumstance from magnified obstacle, so that our actions and reactions are solidly based on truth, not our own or others’ opinions.”

Take a moment to go back and read that again very slowly.

I couldn’t have said it better if I worked at it for ten years!

The key is to have our actions and reactions 100% based on truth, and not our own or someone else’s opinions.

That’s not always easy to do.  We have to work at it.

When we see someone on television, or hear them on the radio, our conditioning has taught us to blindly believe whatever comes out of their mouth as fact.

In reality, it’s likely just an opinion just like anyone else’s opinion you might hear.

It’s similar to medicine.  When the ‘man in the white coat’ speaks, we’re conditioned not to question it.  He must know.  After all, he’s a doctor!

Protect Your Confidence

As you might have guessed, I’m giving this topic extended time and coverage due to how incredibly important I believe it is to your financial confidence, and in turn, the quality of the rest of your life.

When it all comes down to it, all the money in the world is of no value to you unless you have the financial confidence to spend it without the constant fear that you’re going to run out.

Unfortunately, my experience over the last 25 years continues to demonstrate that most individuals are simply not financially confident enough at this critical stage in their lives.

And, that lack of confidence severely limits their lifestyle, and the quality of their lives.

There is a direct correlation between the amount of time individuals spend immersed in all forms of financial media and their level of financial confidence.

However, the correlation is inverted; the more immersed they are in financial media, the less confident they are.

The less confident they are, the lower their quality of life.

It’s a gigantic Catch 22!

In an attempt to feel more confident, most turn to the financial media.

Unfortunately, this only decreases their confidence due to everything we’ve outlined.

Be very protective of your confidence.  If you’re going to tune into financial media, go right ahead, but do so with your antennae standing straight up!