Invest Above the Trees

I’ve been reading a lot of doom-and-gloom articles lately. Some claim that COVID will destroy humanity, financial advisors are stating that inflation is here to stay, and many talk about how retirees are in jeopardy of dying in poverty. Some of these predictions may come true, but many of them probably won’t.In my message today, I will discuss how to ignore crowd and pundit negativity so you don’t make irrational investing decisions. This isn’t easy because news reporters are in the business of getting in front of your eyes.The first thing that is important to note is that wise investing is 90% emotional control and 10% head knowledge. Everyone knows that to make a profit, you need to buy low and sell high. However, historically, investors have done the exact opposite. Studies have shown that the pain of loss is felt twice as much as the joy of gain—this is why investors tend to sell when the market is at its worst and buy when the market has recovered.Second, I’ve been successfully investing for many years, and there is ALWAYS a catastrophe or major issue that is on the brink of destroying the whole earth. I’m being a little facetious, but I’m not inaccurate. If you go back to 2009, the Greek government had a debt crisis that “threatened democracy.” In response to the ‘crisis,’ the stock market dropped by almost 20% in 2011. Last I checked, democracy hasn’t ended, and the stock market hasn’t evaporated. And that’s only one of the hundreds of “major crises” that have happened over the past twenty years.So, here’s how to keep a cool head when the smoke of fear is thick:Get out of the trees. There is a saying that it’s hard to see the forest through the trees. When there is smoke all around you, it is wise to get above the smoke so that you can see things as they really are.Reflect on the past. As I did above, you can see how markets reacted and recovered from catastrophic news by reviewing past events and crises.Stick to your plan. You should have a plan that identifies the purpose of your investments—review it annually and stick to it.Turn off the news. Some of the best investing advice around comes from Warren Buffet. He has said that when you invest in a company, you should be able to feel good about it whether or not you know how the market has priced it for at least five years.Talk to me! I am regularly in the think of things and can provide additional counsel, insight, and emotional stability that will allow you to make wise investing decisions.I am telling you right now that the smoke is thick—be careful not to let short-term smoke affect your long-term strategies. Get above the trees! Ü