On Panic, Faith, And The Determined Primitive

Hey williamrholt-CPF, Your comments go in a long line of people in our industry (mostly CFP's) that miss the forest for the trees. Your clients buy YOU, not the market! I submit that those of us that recognize this fact continue to thrive and grow, those who don't, do at their own peril. We all need to manage investors behavior FAR MORE than managing investments. Further William, your GWB comment was not only near-sighted, but ignorant...maybe you should go over to MSNBC.com and spread your ignorance there...or, step away from your computer and READ MORE NICK!!!!

The only problem I see is that it IS different this time. Debt has funded growth over the last 2 decades and the subsequent deleveraging will decimate balance sheets of good and bad companies. The extend and pretend, boom bust cycle of monetary policy has doomed this country and the dreaded new normal is here to stay. I have faith in bear spray.

[quote=williamrholt]Faith? Faith is an emotion, and emotions have no place in investing long-term. Faith is what people employ when they are to lazy or mentally unable to use logic. Faith gave us George W. Bush.The reason folks are not investing in equities is that it is largely illogical to do so. We have just begun a massive, long-term process of deleveraging which the consumer has just begun to realize. Logically, there will be less growth, less consumption, and yes, less speculation in equities.Get real, Nick. Investing is logic-based, and unless you're a trader faith is a fool's tool.[/quote]What the hell does George W. Bush have to do with this? Faith, like hope and change? It's a rediculous comment to make about a serious topic.I say it's highly logical to buy stocks and hard assets because we are printing money, and spending what we do not have. Why would I want to own paper with no inflation protection?I hoep you didn't spend a lot on your CFP licensing.

[color=black][b]Before doing anything else, do yourself the immense career advantage of hitting the "print" button at the top of this page. Use high-test paper, because the next instruction is to READ this article, first thing each weekday morning, for the next four years. Within one hour of that read, REACH OUT to one person who know would be helped by your counsel, if only they knew the truth. Then, tell them the truth. You will find - sometime between the 2nd and 4th year - that more staff will be needed if you intend to continue these calls. Of course, that particular decision will be entirely yours.[/b][/color]- Matthew S. Clement, Retirement Planner, New York and New Jersey

Ah, logic...were it only true that people made decisions exclusively logically. But in truth, most people make decisions emotionally and justify their decisions with logic "reverse-engineered" from that decision point. My take is that people don't invest today because they were scared silly by the incompetence of those supposedly "in charge". Fear is a very powerful emotion and can move people to act without regard to logic in the moment. Logic is only used to justify their actions after the fact. Thus, people in panic sold and then justified the action as "logical" because it removed them from the source of the fear - uncertainty about the future.Unfortunately, it also removed them from the only "logical" source of recovery as well.How does one overcome, to the extent possible, acting in fear? It's not like the market won't still take you for the ride and less likely still that those "in charge" will refrain from doing something stupid. So, how do you insulate yourself and your clients from this fear?Faith, an emotion, justified logically by history and an understanding of the nature of mankind, is really the only way.You don't control the markets. Only your emotional reaction to them. Manage your client's fears but then justify your recommendations logically.

Faith? Faith is an emotion, and emotions have no place in investing long-term. Faith is what people employ when they are to lazy or mentally unable to use logic. Faith gave us George W. Bush. The reason folks are not investing in equities is that it is largely illogical to do so. We have just begun a massive, long-term process of deleveraging which the consumer has just begun to realize. Logically, there will be less growth, less consumption, and yes, less speculation in equities. Get real, Nick. Investing is logic-based, and unless you're a trader faith is a fool's tool.