Here are some questions I have been getting recently - and my responses.
How do we embrace a new reality?
• Step outside of your ego and stop taking it personal.
• This really is not about you or me or any of us.
• It is about the market and rule #1 for investing in the markets is to not take it personal.
What does this do to the future of investing in America?
• This whole experience has opened people’s eyes.
• The amount of education that is going on is tremendous.
• Everyone is reading, watching and talking about the economy – more than ever before.
• The average person now knows more about the markets, how they operate and the risk-rewards that it produces.
• This meltdown is the best thing to ever happen to Americans – we are all smarter as a result. We just paid for an education. And no one can ever take that way from you.
Will anyone invest anymore?
• Yes they will. And probably more aggressively than they did in the past.
• People are scared now about putting money back in but we are human, and humans have short term memories.
• All it will take is a few rallies and stories about people investing and making money and then everyone will want to get back in again.
• People and their behaviors are very predictable – especially when it comes to investing.
Will enough people come back to the market?
• Yes they will. Once the “acceptance” stage begins, people will be looking for places to invest their money and as long as the markets exist, then people will want to invest.
Is it even possible to restore this loss?
• If you mean “recover the money that was lost” then I would say, probably not because traditional investment strategies are designed to earn slow and steady returns.
• But that really should not be anyone’s goal at this point because what is lost is lost.
• All that matters is what is your investment account is worth right now.
• It does not matter at all what it WAS worth.
• So stop anchoring to the past and get your focus in the present and in the here-and-now.
Will perceived self-worth still be valued in cash?
• I think so. Money drives the world.
• I think what the government is doing now is actually going to make it even worse, because they are rewarding people who exhibited irresponsible financial behaviors and taxing the wealthy more heavily to pay for it.
• The psychological message being sent is: a) if you are irresponsible, we will help you out; b) if you work hard and out-perform your peers you will get punished.
• The government seems to be spending way too much time on policy and not enough time thinking about the psychology and its impact beyond the balance sheets.
Dr Doug
