Does This Sound Like Anyone You Know?
Imagine for a moment that you’re having a conversation over dinner last Friday night with your brother and his wife. Answering the common question, “what’s new”, he dives right in and shares what he’s been up to.
In addition to the nice home he owns and lives in with his family, he also owns a two-family home in town which he has been collecting rent on for 15 years.
He explains to you that he called up his real estate broker last week on a Tuesday afternoon and asked the broker what she believed he could sell the rental property for that day. He didn’t want to know what he could sell it for in a month or two, but right then.
Given the demand for a quick response, her answer was $600,000.
He then called back on Wednesday morning at 9:43 a.m. and asked how much she thought he could receive if he sold it then.
He then called back at 11:57 a.m. and asked the same question.
Finally, he called her back that same afternoon at 3:26 p.m. and asked how much she thought he could sell it for then.
Before you called the local hospital for the men in the white coats to come and take him away in a straight-jacket, you asked him if he did this often.
“Oh, I do it all the time,” he said
Why, you ask, do you waste your time if you’re not selling?
“I like to stay on top of things so I know how I’m doing.”
Imagine for a moment that you’re visiting your brother and his wife at their home in Florida.
In the first morning of your visit, you notice that he’s watching CNBC’s Squawk Box on television and there are two guys shouting conflicting opinions on the effect of The Fed raising interest rates on market prices.
As you’re all waiting on him to head out for lunch, you notice that he has Yahoo Finance pulled up on his iPad checking the prices on the different stock market exchanges.
“The Dow is down 120 points,” he laments as you’re walking out the door to the car.
At the conclusion of lunch at the restaurant, he asks the waiter to switch the channel on the television over to CNBC so he can see what the market is up to.
After some shopping in town, you head home in his car. On the way, he has business radio tuned in on the radio so he can hear how the market closed at the end of the day.
After a nice meal at his home that night, you all settle in to watch Jim Kramer discuss his take on the market activity that day, and what he recommends everybody do in reaction to the day’s events.
After a futile attempt to get him to change the channel over to a comedy show that you can all watch, you gently ask him if he “paid this much attention to the market every day.”
“Of course,” he said. “Don’t you?”
After replying that you don’t, you then ask him why he does it.
“I like to stay on top of things so I know how I’m doing.”
Before I share a very important distinction, I’d like you to ponder and evaluate three questions for a moment:
- Is the behavior by the brother in story #1 any different than the brother in story #2? If so, why?
- Is there anyone you know who resembles the brother in story #2?
- What is each brother looking for?
Please take a moment to really think about these.
What Do You Think?
Okay, what do you think? Is the behavior exemplified by the brother in conversation #1 (real estate) any different than the brother in conversation #2 (stock market)?
The answer is no. There is no difference at all! They’re both equally bizarre and destructive.
The only difference is the investment vehicle they’re using.
Upon first glance, I suspect the behavior of Brother #1 (real estate) appears more outrageous.
I also suspect you know someone who mirrors the behavior of Brother #2 (stock market). Perhaps you know someone like this quite well.
We all do and it’s becoming way, way too common. The media has turned investing into a sport with minute by minute reporting of “points” on the Dow. Why do you think they use that terminology?
The truth is that the behavior of Brother #2 (stock market) is no more bizarre and destructive than the behavior of Brother #1 (real estate).
Randomly “checking in” via the internet, TV, or your iPhone, etc. multiple times a day to “see how ‘the market’ is doing” is the same as Brother #1 calling his real estate broker on three separate occasions in one day to find out how much she could sell his rental property for at that precise moment.
Neither accomplishes anything.
What Are They Looking For?
The bigger question is #3 which is what are they looking for?
What they’re both looking for is a sense of certainty in the short and long run.
They want to make sure they’re not “falling asleep at the wheel” and missing out.
The reason they have this feeling and desire is their overall “big picture” interpretation, and thus ingrained belief of the world on a day to day basis, i.e. that world economies and financial markets are completely fragile, erratic, ungrounded, and out of control.
And, that the bottom could permanently fall out of their financial lives without any warning whatsoever, and they could be permanently bankrupt because of it.
Please take a moment to go back and read that paragraph again. It’s that important.
This is the psychological state of most retirees in America today, and it is my strong opinion that it is not necessarily their fault (in the short run). I emphasize “in the short run” because in the long run, everyone has a responsibility to continuously seek the objective truth, and discard everything else which has not objectively been proven to be true.
What everyone is fed by the mainstream financial media over and over on a day to day basis confirms that economies and financial markets are completely fragile, erratic, ungrounded, and out of control. And, that the bottom could permanently fall out of their financial lives without any warning whatsoever and they could be permanently bankrupt because of it.
If anyone were to take a step back and unemotionally evaluate this assertion, they could and would arrive at the truth which is that it is completely false.
However, the daunting and fragile picture the financial media paints is not reported because of its level of truth. It is reported because it keeps millions and millions of viewers tuned in day after day after day.
Think about it. If the financial media can perpetuate this myth, and they can get millions to buy into it, then they condition those millions (like Brother #2) to tune in multiple times each day in order to fulfill their conditioned desire to “stay on top of things.”
If engaging in this activity was of any value to you, I’d strongly endorse it in a heartbeat. It is not.
In fact, I recommend doing everything you can to avoid this trap.
Investing is not a sport, thus scoring it on a minute by minute basis, as the financial media would like you to do, is not only unhealthy, but it is ineffective as a means of helping you achieve your long-term goals.
This does not mean that you should aimlessly bury your head in the sand. What it does mean is that, in the face of the endless barrage of information coming at you every day, you must exercise extreme levels of awareness of the “intent” of the information, to remember that you are in control, and, above all else, protect your confidence!