You've Got Mail
We live in a world where people are bombarded with information daily. It’s been said a typical person consumes more information in 24 hours than someone in the 1800’s did all year long.
That information can be found in the media, on social networks, from their friends, in their email, and on and on. Often the story is troubling, playing on peoples’ fears and positing a worst-case scenario happening. You’ve got mail, and it’s super scary.
“The Dollar is set to implode”
“Hyperinflation is near”
“The Stock Market is going to crash”.
Those headlines demand your attention because someone telling you how bad things might get appears as if they are trying to help, even when that’s usually not the case. Fear inducing statements can be dead wrong for months upon months, with absolutely no loss of reputation. Why?
That's why, because fear sells, and humans always want to know what could go wrong. We are risk averse animals by our very nature, we can’t help it. Pessimism is a seductive message that preys on deep-seated fears about an unknowable future. Tell a person to be afraid of something and you will almost always have their undivided attention.
I spend most of my time harping on the antithesis of that idea, writing (and speaking) about certain themes in markets and investing that I believe lead to success: emphasize good behavior, think long-term, ignore the noise, focus on your plan, listen to an advisor.
Most of these ideas are rooted in optimism because investing for the long-term is akin to betting on the world improving over time. Howard Marks said in his latest memo: "To be a good equity investor, I think you have to be an optimist; certainly, it's no activity for doomsayers."
If one of the best investors of all time says investing is “no activity for doomsayers” why would you let these scary stories impact what you do?
So, dear reader, here is my plea to you before you forward an email to your advisor and say, “this seems bad, should we do something?”
Think about the sender and what their motivations are. Does that person know anything about you? What your hopes and dreams are, what kind of investment strategy you’re using to reach those goals? What is the author selling?
How does that person know what the future will look like (at least any more than anyone else)? How many “worst case scenarios” described in an email or a social media post actually end up happening?
If the World is about to end, and the economy is set to collapse, and we’ll be bartering for food with bottle caps, you have bigger problems than how much Microsoft you own (also that gold is going to be really hard to spend).
The fewer scary stories you read, the less likely you’ll be to look at the market every day, the better off you will be on your pursuit to financial freedom.
Just like you wouldn't take medical advice from an email, don't take financial advice from one. Fear always sells, but you don’t have to buy it.