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November 01, 2011 at 08:00 PM
A funny thing happened one day in early August when the markets hit panic mode. I spoke with a few reporters and even fewer clients. I fielded two calls from concerned clients—one whose son had planted a significant seed of doubt in her mind and another who just wanted to hear my voice; since she didn’t hear any hint of panic, she went on to share the great news that her son had landed a very good job, very close to my office.
As financial life planners, we devote a great deal of time discussing volatility, market reactions and panic—we talk a lot about the dangers of buying into this mindset and about the fact that emotions are best devoted to loved ones, music and art. Such was the tone in my world. Not so in the world around me. The world at large was predicting a double-dip recession, pointing the boney finger of indignation at Washington, Greece and Italy.
At the end of that day, I ran into an attorney who works in my building. He offered me words of sympathy, saying something about what a rough day I must have endured. I tilted my head and asked what he meant. I knew.
His look of sympathy was replaced by confusion—he expected a different response. I explained that as financial life planners, we don’t buy into market emotions and try our very best to prepare our clients to get through trying times. It’s all about time, understanding the different risks we face and staying focused on our goals and values. He walked to his car asking me if I might have some time for him next week.
That evening, I dumped a precious 90 minutes of my time reading various articles, tweets and pronouncements citing rational reason and statistical and historical precedents for this latest round of market woes. I read many points of view and interesting facts and near-facts, but came away without a change in my thinking.
As a nation, as a world, we need to examine our own financial underpinnings and take more responsibility for understanding risk. We must examine our values and our needs (as opposed to our wants) and make sure our own financial lives are in order. Risk is everywhere, but those who believe they can extract consistent profits by short-term trading are most probably incorrect.
