Anyone who has raised children remembers one of the biggest struggles is trying to appease a toddler who suffers from nighttime anxiety—and how reading to the child helps. Once children get hooked, they beg their parents to keep reading and reading. This is key in that it is a way to appease children’s fears and also gets youngsters involved in reading at an early age. That is the good news. The not so good news is that although young children ultimately give up their fear of the dark while going to sleep, this type of regressive behavior does not stop at adolescence but continues onward through adulthood. The same need for appeasement can be seen in adults who, because they don’t operate under sound judgement when it comes to the inner workings of their investment portfolios, latch on to nonsensical stories.
A very good example of this is when adult investors need to have their own personal fear of market meltdowns soothed by reading and listening to forecasts and predictions by so-called market experts. Crash-proof Retirement and Preparing for the Coming Financial Meltdown are just a few topics that lure people into purchasing books and DVDs that draw unprepared investors into a state of daily dependency on such fodder. The irony and sad component to our thesis is that when adults are asked whether they truly believe that anyone can predict the future, they emphatically say no.
Just as tough love is required in the raising of a child, adults need to have a trusted advisor walk them through a similar set of questions that get to the deep seeded reasons they fear drops in stock prices. We call this behavioral deficiency “Addiction to Prediction”. We have developed three remedies that may sound a bit strong in our estimation but are the most effective ways in which to combat this form of self-degradation.
Three Remedies for Addiction to Prediction
- When you hear a so-called expert in the field of Investments say “I believe” or “We feel” as it pertains to a future forecast, commit to yourself to turning off the station, stop reading the article or simply hanging-up the phone.
- When you hear an analyst reference their so-called “Black Box” or proprietary trading technique that they are willing to sell you that will make you a fortune (just like it made them), commit to turning around and walking way. Yes, this may appear to be extreme, but it is the only way you can truly protect yourself.
- When you hear an advertisement touting the one who predicted the 1987 Crash or the 2008 Housing Bubble, consider writing them a note asking them if and when they ever got back into the market. We are always amazed when those who predicted the so-called crash never told us when to re-invest back into it. You want to know why? Because like anyone else, they can’t predict the future and should not attempt to do so. The only way they will ever cease to stop what they are peddling is for you to stop listening to them.
Just as monsters don’t live under the bed and teenagers don’t want Mommy to read them a bedtime story, so should investors take a step towards maturity by recognizing that people can’t predict the future, and that get-rich schemes don’t work. When a child grows into adulthood and is reminded about needing be soothed at night when they were younger, they laugh with amusement at their former immature ways. In the same way, when an adult reaches a state of Clarity with their investment plan and they hear bedtime stories in the form of forecasts and predictions, they smile with amusement that they no longer need to fall prey to such petty nonsense and sensational storytelling. We believe that worrying about factors that we can’t control or latching on to predictions or buying into get-rich-quick schemes is juvenile and futile. Understanding what you own and why you own the investments that are in your portfolio is time well spent and puts you on a path to greater maturity in your approach to investing.
We call this process, the Road to Nepsis®… the Road to Clarity.
Are you ready to join us? We are here to help be your guide.
Advisory Services offered through Nepsis, Inc., An SEC Registered Investment Advisor.