Despite an efficient velocity in market direction during this past January, and an expected capitulation this month, there remains an inefficiency in our emotional response to whether we're "doing well" or "doing poorly."
Don't get me wrong. Steadily,
we've seen a recovery in many facets of economic measurements. Earnings
are broadening, housing prices are increasing, portfolio and 401-k valuations
are rising, unemployment is creeping back down. But while we may herald a
new enthusiasm for all things financial, we are suspiciously left scratching
our heads about why it is that we feel as if it's all happening to someone
else, not necessarily for us, but to us.
The single biggest
predictor of financial growth is not how much money we have stashed away in
secret savings accounts, but how much confidence we feel about a fair return
for the deployment of those dollars. In that sense, corporations and individuals alike uniformly adhere to a
quid pro quo matrix. Investing must be fair; it must be reasonable; and,
win or lose, it must be swathed in aspiration that makes us feel worth making
the investment in the first place.
Right now, the chasm that
exists between our perception of value and its real impact upon our
"bottom line" is still quite wide.
Science.
Many are quick to inform us
that markets are inherently unfair, that the playing field is not nor should be
really "fair," in the sense that there should never be a guarantee of
quid pro quo. After all, they argue, it is entrepreneurship and
risk-taking that makes economies function efficiently. In all endeavors,
money too, they believe that there should be winners and losers. Such is
life. No equivocation.
My proprietary science does
not disagree objectively. However, if the purpose of investing is not
only to generate profit but also to provide capital for meaningful social
contribution, then there is an additional burden at work when evaluating risk
versus reward.
Anyone can scam the public
with a "get rich now/get rich quick" scheme. Fewer, though, can
subpoena capital for a "purpose." In that regard,
values-based investing provides meaning as well as the chance to get rich.
Who wouldn't want to hit that jackpot of success?
In this dichotomy between
being rich and feeling rich, what one stands for is as much a
confidence boost as the quantification of how large the profit.
Decline versus advance.
One factor that seems
compelling in understanding consumers' mood is an ability to separate time and
anxiety from the process of investing. Getting impatient about portfolio
returns, even when executing a well-structured methodology, is the worst thing
one can do. Either we feel that we're not making money fast enough, or we
lose patience when caught in a short term decline. But in either case the
answer to building wealth is not in a staccato-like goal orientation, but
rather to be patient and diligent in effecting one's science.
Time after time, confidence
(and success) comes from maintaining a steady hand on the rudder. January's
sudden burst out of the gate is analogous to a long-distance runner
beginning the race as a sprinter. There has to be a perception of
time and value, duration, calmness, and trust in order to succeed at investing.
Are we "doing well"
or "doing poorly?" In life, a sense of equilibrium
emanates from an inner peace and a longer term purpose. Losses and gains
are ethereal. Discipline is not.
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