As humans, we often have the urge to do something. Do do do, we must do! It often seems inherent in human nature. Is it?
Advertising provides the thrust that runs our lives. We are motivated by advertising showered upon us. So we learn and repeat what we hear and see. That is why fads occur, that is why booms and busts happen, that is why we normally live homogenated lives. We hide our originality and our essence.
We hear about the latest investment and we all pile on. Things go in and out of fashion based on the opinions of crowds. When the possibility of profit is perceived, an enormous emotional and psychological momentum arises, and we tag along for the ride, unaware that we are simply hangers-on in a full-length production starring others. This production event is like a costume opera performance, with actors, drama, costumes, plot and counter-plot, and so on. We are merely the spear carriers, except we have provided the funding.
So when we come in contact with such events, we never stop to think whether doing nothing would be the better course. In fact we don’t seem to think at all. We just allow ourselves to be swept into it all, mainly because we see others in the same predicament.
The Other Way
Doing the opposite seems like a way out. Namely when others are all clamoring to do something, to join in whatever the latest trend is, we instead can do nothing. And when there is no fad and no crowd, that is likely the time to do something.
Back on Earth
Meanwhile, how does this affect our financial life? In many ways…
When the latest financial fad hits the media and is disseminated far and wide, it seems many are unable to resist the attraction. FOMO reigns, and people pile on. Some will make money, but many will not. When things fall our of favor or there is a market decline, it seems some are unable to resist the lure of selling. No one seemingly wants to be stuck with what others might call a financial dog.
Resisting the siren call of others’ opinions is a hard lesson to learn. But for me, it lets me sleep at night.
Learning What To Do or Not
Many have repeated Warren Buffett’s advice: be “fearful when others are greedy, and greedy when others are fearful.” This requires some acuity and self-awareness. It flies in the face of conventional FOMO behavior. But for long-term dividend investors, it is the best advice. As said, time in the market beats timing the market.
What are you doing, or not doing? Let me know here.
The hand-colored woodcut illustration “The Ten Ages of Man” (“(D)is (s)ein die zehen eygenschaft des altters der menschen vnd wem sie gegleich(t) werden (enthält schon fast alle Elemente der späteren „Lebenstreppe“, die Altersstufen sind jedoch nicht als Treppen und damit als Aufstieg und Abstieg dargestellt)”) is by an anonymous German artist. 1482. Courtesy, The British Museum.
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