Don’t Fall into The Trap

Messages Worth Repeating

Every week we deliver new content in all 5Fs (faith, family, friends, fitness, and finance), but you’ll notice that our content often comes back to common themes. That’s because there are certain principles that are critical to accept and embrace if you want to grow. Across all five F’s, one of the key themes that I believe is this: the four most dangerous words are:

• “It’s different this time.”

Now you can quibble on whether that’s four words or five, but I don’t think you can argue the importance of understanding these four words.

What’s Different?

First, let’s focus in on what I believe most would agree is the same:

• Across time, individuals have repeatedly sought out ways to make more money.
• Across time, individuals have repeatedly sought out ways to make more money EASIER.
• Across time, people have preyed on individuals pursuing the lure of “easy money.”
• Across time, there have been periods of rapid destruction of wealth.
• Across time, people have panicked during these times of wealth destruction.

My guess is that 99.9% of people would agree on the above. And yet, we continue to have one area where people’s actions show us that there is a lock of comprehension of the above “truths”:

• “If I buy this one thing, I’ll get rich quick.”

This behavior is incredibly destructive when it comes to personal wealth creation. Furthermore, in my opinion, it won’t EVER be curtailed, as humans are hard wired to look for the easy way out—in spite of knowing that it does not exist. It’s NOT different this time!

So What Is the Answer?

Great question! There are three things that you should do, in my opinion, when faced with any financial decision:

• First, accept the “truism” that it is NOT different this time.
  • If you go against this truism, you are essentially saying either that you are smarter than history, OR that history holds no truths. Either could be true. But I don’t like the odds.
• Second, ask whether the action you are about to take is based on fundamentals that have been proven over time, OR whether you are believing “something is different”—and that belief is what is driving your action.
  • Going back to solid fundamentals is ALWAYS a good idea. Might they change? Sure. But, more times than not, the fundamentals remain the same.
• Third, choose the do nothing alternative and stick with your plan.
  • If you have put together a solid, well-thought-out financial plan, you have ALREADY considered the possibility of a disruptive influence. The plan should have a contingency for this situation.
  • Execute this contingency versus some “new and better” option that has emerged as a result of the “opportunity.”

Do these three steps guarantee success? Nope.

Do these three steps cause you to sometimes lose out on short-term opportunities? Yep.

KEY: Are these three steps something I embrace and can confidently suggest to others for consideration knowing that they are of more help than harm? Yep.

I’m not naïve. Sometimes truly revolutionary things happen that change our world. And those times do require us to reevaluate our strategies and change accordingly. However, these are STRATEGIC changes versus OPERATIONAL changes.

• If you’re convinced that your strategy needs to be over-hauled, go for it.
• But, if the strategy is remaining the same, your operational decisions need to remain consistent, and rarely should they be extreme.

Hopefully, you’ve taken away an idea or two away from today’s message. If even one individual somewhere in the world does so, then my efforts will have been worthwhile!

Would You Like More Support?

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• Do you have a well-defined Investment Policy Strategy that is used to drive your investments in support of a comprehensive financial plan?

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• If not, would you like to partner with someone who is used to helping people get through these struggles and (then, with confidence) implement portfolio strategies in a systematic manner while focusing on your desired outcomes?

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If so, feel free to send us an email or give us a call. We’d love to have the opportunity to help you find a bit more peace of mind when it comes to investing.

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