I also take issue with the advisor’s urgency to sell and assumption about “irreparable harm from the breakup of the EU.” No one knows what will happen, and he shouldn’t be speaking with such certainty. Again, I am not saying the vote is no big deal nor am I suggesting a direction for the markets. I’m just pointing out that the advisor’s words and mood are not helping his client.
The biggest culprit here is the caller himself. He has decided to follow the story in real time. By doing so, he is fanning the flames of his own fears. It doesn’t have to be that way.
This year’s NBA finals were played when I was overseas on vacation hiking in New Zealand (highly recommend, btw). Because of the time difference, the games were played in the middle of the afternoon for us when we were on the trails or busy with other activities.
One member of our group is an avid Steph Curry fan. On the day they played game 7, when we got back to our hotel, we saw the coverage of the Cavaliers win. His reaction to the Warrior loss was to wince and say “Aww. That’s too bad.”
Had he had access to a TV, he surely would have provided us with an animated display of emotion. I’ve seen it.
That’s the difference from hearing a result after the fact and watching the result unfold live.
The caller is tense because he has put himself in position to be tense. He is ingesting information from a provocative media and is trying to decide what to do about it with someone who is adding another layer of stress.
He could choose to do something else.
My calm client has made other choices and seems far better off for it.
My client doesn’t watch cable news. He will watch a little local news and reads a local paper that includes national and world news. He knows about Brexit, but the information was not shouted at him by four talking heads all spouting off at the same time interrupted only by an anchorperson teasing him to stay tuned.
He understands why he owns what he does. He understands the value of diversification and maintaining a long-term view. He knows markets are volatile, so volatility isn’t odd. He knows markets can adapt quickly and have recovered after shocks. He understands what we do for him. I think other clients share these qualities which would explain the lack of calls during the down days.
It wasn’t always that way.
When Nelson first became a client, he had a good handle on the basics of long-term investing so our emphasis on diversification, patience and discipline appealed to him. Our financial planning capabilities were also important to him.