Every Imprudent Action Requires a Necessary Lie.

All of us have said, ‘but it’s different this time’ ….’This Time This Expert is Right for Sure’……’I’m due’…..

As I write this Cyber Monday is in full swing. We all rationalize that because everyone is buying today we should as well. We say we can save a lot of money by not waiting and buying now. Many people are buying things they don’t need and in many cases they don’t really want what they are buying.

NASA Sunspot Number Predictions for Solar cycl...
NASA Sunspot Number Predictions for Solar cycle 23 and 24 (Photo credit: Wikipedia)

A necessary lie is a rationalization to justify self-destructive behavior. Some additional examples:

  • I will start my diet tomorrow…..
    So I will pig out today.
  • I’ll just gamble until I get even…..
    So I will let it ride.
  • I will buy today and pay for it tomorrow. Because I really want this…
  • This time I really do know what the market is going to do….
    so it’s all right to speculate with my money.

Remember if you do not know two numbers you are speculating with your money. They are expected return and expected volatility (risk).

We all watch the news and hear the latest predictions. These predictions are nothing more than guesses by ‘experts’ who have no clue what will really happen. In most cases their predictions are really a sales pitch for their product/solution.

The equity markets are random and unpredictable. You will hear many ‘experts’ say that when this happens this will happen.
What they don’t tell you or don’t know themselves is that thousands of variables will have to perfectly align in order for their prediction to come true. This proves to be nearly impossible.

There are two groups of people when it comes to equites or interest rates for that matter. Those who don’t what will happen next and those that don’t know they don’t what will happen next.

Stop lying to yourself that this time is different. Predicting the future is very difficult. Those that appear to accomplish predicting something are relying on luck and not skill.

To succeed long term in reaching your financial goals you must own equities….globally diversify….rebalance.

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