Beyond Buy-and-Hold #33
I’ve never talked about this on the internet before. It’s a personal matter. My general thought is that my weight problem is properly none of your concern and none of your business.
I bring it up here because of my never-ending quest to get people talking openly about the true cause of our economic crisis. When large numbers of people come to believe that there is no need to consider the price at which stocks are selling when setting their stock allocations, there is always an economic crisis. I want to get us back on the right track and that requires helping people come to a better understanding of the dangers of Buy-and-Hold Investing.
I’ve run into a bit of a brick wall.
The case against Buy-and-Hold is rock solid. And yet most of us don’t care. Most of us continue to follow Buy-and-Hold strategies. Many of us go so far as to continue to promote them.
I must be doing something wrong.
Is there a connection between excess weight and excess stock prices?
Pondering what it might be got me thinking about my weight problem. I see a similarity in my dealing with weight issues and in your dealing with investing issues.
I don’t want to be fat. It’s pretty darn easy to figure out what I need to do to fix the problem. Stop eating so many chocolate chip cookies!
Losing weight is very, very, very easy. Intellectually.
And losing weight is very, very, very hard. Emotionally.
I’ve come to believe that it’s the same way with investing.
You don’t want to hear the case against Buy-and-Hold because somewhere deep inside you’ve known from the first day that valuations affect long-term returns. Hearing me make the point just makes you angry with me for bringing up a sore subject. You follow Buy-and-Hold because of the emotional comfort it provides by encouraging you to believe that bull market gains are real.
I’ve had people tell me about all the great reasons why I really should try to lose weight. I would look better. I would be more confident. I might prevent myself from suffering a heart attack early in life. I would have more energy.
Those arguments never work. I know all those things already. So I’m not impressed to hear them.
There is no intellectual solution to an emotional problem
I’ll begin making progress with my weight problem when I become emotionally committed to doing so. Let’s hope that it doesn’t take a heart attack to get me there!
I need to find a way to get you emotionally committed to solving your Buy-and-Hold problem.
I don’t know what would work. I’d be thrilled to hear suggestions.
The best I can do today is to consider what it is that makes me eat too many chocolate chip cookies. I eat too many chocolate chop cookies because the world is a scary place and I am one of the vulnerable humans trying to bravely face up to all the things I must face up to to make my way in it.
We all do something. Some of us drink to block out the anxieties. Some of us become addicted to our work because work is more manageable than the scary stuff and it makes us feel in charge to be able to manage stuff. Some of us gamble to feel a thrill that displaces the scary feelings. Some of us distract ourselves from our own flaws by becoming masters at detecting the flaws in others and spend most of our time pondering the changes all those other people need to make in their lives.
Conquering our emotions: the key to success with weight—and with investing
When I figure out the answer to my weight problem, it’s going to involve something that takes the reality of my emotional vulnerability into consideration. Perhaps I’ll find that running does a better job of taking my mind off my troubles than eating chocolate chip cookies. I might end up becoming too skinny!
Here’s one thing I can say today: I don’t think that those of us who follow valuation-informed investing strategies are better in any ultimate sense than those who do not. I certainly believe that the strategies are more effective. But we have our fears that cause us to entertain our fantasies too (it is fantasy thinking for me to persuade myself even for a few moments that eating another chocolate chip cookie is going to solve any of my problems). We’re the same as all the other humans except that we’ve mastered some things that the other humans have not yet mastered (just as they have mastered some things that we have not yet mastered).
I care about you and I want you to achieve your life goals. I don’t think I am better than you. I hope that my act of working up the courage to say that much gets us started on a journey together to a better place for both of us.
Yak! This stuff is scary! I need a cookie!
Rob Bennett does not believes that stock prices are a random walk. Rob’s bio is here.