A number of factors have
conspired to make investing not the same game it used to be, not the least of
which is the excessive need for speed and immediacy of information. Keep in
mind that before the internet, fortunes were also won and lost. Key elements of due diligence exist today,
just as they did then. The difference is access and acceleration
of information digested. The human
brain, unlike the computer, just isn’t wired for that type of speed when
processing data.
As a result, many investors
are unprepared for the impact of exogenous events upon their “plan.” When
the market moves at a snail’s pace, it is unacceptable to traders, when it
moves at warp speed it is too fast for investors.
Whether you are one or the
other, there is very little choice but to carry on dissatisfied, scared, or
disassociated.
Fewer investors today, by my
reckoning, are satisfied with their portfolios or their agents. Many make it worse, in my judgment, by going
it alone, trading off of discount platforms and do-it-yourself systems. Those stresses don’t get any worse than
having a full-time preoccupation with Wall Street’s faults and
inefficiencies. Most investors have an
unrealistic set of expectations for success.
More often than not their one big “home run” is offset by a sequence of
smaller, or larger, failures that net-out to nothing gained. Too often,
they fall short of their goals, increasing the stress level in their lives.
No compromise.
Sticking to an investment
discipline is more often successful in achieving portfolio gains than jumping
around looking for the next “hot” idea. Going on vacation and forgetting the market sometimes produces a better result than a
week of constant trading.
Everyone feels the pressure of
trying to perform. It appears, though,
that the “experts” have bungled the assignment altogether. Fiscal
policy, boardroom decisions, computer programs, global politics, and exogenous
influences have conjoined to produce a less
efficient combination than at any time in market history. These inefficiencies therefore create greater
discomfort for the investment community.
It used to be an anomaly for
the market to lose 4% of its value. Last
week, it happened at least twice…in one day!!
It is no longer an aberration that the market gyrates at this
magnitude. Moreover, its frequency is
increasing, as well. It is no wonder
that investors might abandon the undertaking altogether. And they have.
Others rush into gold, cotton,
real estate, anything to provide temporary, but quick, relief. That is not a strategy or methodology,
despite what your best friend (the stock market genius) might tell you. It is fear, greed, and selfishness at its
worst. It is the other end of the
investment spectrum. It is like a valium
for the distressed mind.
The markets are likely to
continue along with manic progression for awhile. Fears about job security, real estate and
portfolio valuation, and a global economy in ruins are sufficient to sustain a guesswork
paradigm that could affect portfolios severely.
While I won’t suggest we turn
off the computers and study our hunches more profoundly at the library, I might
offer that man is a more potent weapon than a machine, and less likely to need
a re-boot at the worst possible moment.
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