OK I was on vacation in Arizona last week during the Super Bowl. By the way when I left Phoenix it was 85 degrees and upon arrival in Milwaukee I was greeted to 0. Yes that is 0 degrees.
Today’s message would be a little more, timely had I not been enjoying the sun. While watching the post-game interview with Peyton Manning. I noticed, as did most people that the question of his retiring came up a number of times.
Although Peyton was exciting about winning the Super Bowl he remained composed and gratuitous. He handled the situation with his usual class.
His answer to the retirement question struck me as a lesson all of us can learn from. He said, I will be paraphrasing. “I talked with Coach Dungy before he game. And he told me to not make an emotional decision about retirement. I should take my time and decide in a rational way what to do. I have decided to listen to Coach.”
Investors would be well advised to follow this sage advice. Most investors make emotional decisions with their investment dollars during market extremes.
When an asset class is surging ahead like tech stocks, large cap growth stocks, small stocks, large cap value stocks, emerging market stocks, commodities, gold, and on and on.
These emotional investors will put a large imprudent portion of their investment money into the ‘hot’ asset class. Only to be disappointed which the ‘hot’ becomes the ‘cold’.
The opposite occurs when the markets are in what seems like a relentless decline, like we are experiencing right now. These rational investors will make irrational emotional decisions with their investment dollars.
They will sell or go to the ‘hot’ adviser that ‘predicted’ the decline. Believing that this ‘hot’ adviser will continue their ability to predict the future.
As I have said many times in the past the equity markets around the globe are random and unpredictable. When you find an adviser claiming predictive abilities it is a matter of LUCK and not skill.
Please remember we are all human with the emotions that go along with being human. We need someone to guide us through the huge amounts of information regurgitated by the financial media and the Wall Street bullies.
We need a coach to remind us to refrain from making an emotional decision with our investment dollars.
If you have an investor coach/fiduciary adviser you have the help to guide you through turbulent times. Because while turbulent times are happening it seems like they will never end. We sense that we must get out before they drop to ‘zero’.
Bad times end, good times end, that is the only constant. There have been down equity markets in the past and there will be down markets in the future. It is all part of investing.
I have always found it curious that investors considered crashes of the past to be buying opportunities while current or future crashes are considered risk.
So take some advice from future NFL hall of famer and Super Bowl champion Peyton Manning and “listen to my/(your) coach’.