Taking a stand that separates you from the crowd is very hard to do. It requires you to swim upstream against millions of years of conditioning. We are wired to believe that our safety and even our survival depend on staying with the larger group. Striking out on our own feels very uncomfortable.

It is even harder these days because the voice of the crowd is amplified through the media. A perpetual procession of punditry purports to tell us what the future will hold and what we should—no, what we must—do about it. They are well-credentialed, well-dressed, well-spoken and full of confidence. Their gravity draws you in.

Yet those who have studied the forecasts of the futurists and the predictions of the punditry tell us that very often they are just plain wrong. Future Babble by Dan Gardner, The Signal and the Noise by Nate Silver, Wrong by David H. Freedman and Expert Political Judgment by Philip E. Tetlock all document the shockingly poor performance of those who would tell us what the future holds. Indeed, Tetlock’s studies reveal that the more well-known a prognosticator is, the poorer his or her predictions about the future are likely to be. He found that, as a group, experts are less accurate in their predications than a room full of “dart-throwing monkeys.” As Nobel Prize-winning physicist Niels Bohr said, “Prediction is very difficult, especially about the future.”

So our job as investors is to resist the herd-following urges that have been ingrained in us over the centuries and close our ears to the Siren song of the experts/entertainers who fill our world. We must follow the road less traveled and act according to what we can see and measure and truly know, not upon guesses and speculations about the future. There are simply too many variables that determine how events will unfold.

Breaking away from the herd doesn’t mean we need to travel entirely alone. There are many trusted and reliable sources of valuable information, guidance and even wisdom. But we should not confuse the general consensus on the street with the knowledge and advice of those who truly have our best interests at heart.

This is a hard task. Walking with the herd brings comfort in the short term. We all like to experience the approving nods and affirmations of those around us. But being a successful investor requires us to occasionally step outside our comfort zones and take an independent stand. We must be willing to eat some pink popcorn when those around us are munching on blue popcorn. If we do, we have a better chance of accumulating enough assets to provide financial security for ourselves and our families. That will be far more rewarding in the long run. 

Scott A. MacKillop is president of Frontier Asset Management LLC. Frontier manages portfolios for financial advisors and their clients. He can be reached at [email protected]m.

 

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