Investors Shouldn't Give In To Messages of Fear

I like to watch Bloomberg TV in the morning as I’m getting ready for work. It’s a way to mentally prepare for the day, and get a sense of the markets, and the major storylines from around the world, before heading to the office. It may seem an odd ritual for someone who talks and writes about the importance of ignoring daily market movements, and tuning out the sensationalist financial media, but I think there is a big difference between choosing to look beyond the short-term, and being uninformed about it. Plus, there are some really smart people who come on, and I actually enjoy listening to them explain their ideas, even if I completely disagree with many of them in the end.

Recently, however, a commercial has been running ever more frequently, which at first, I just laughed off as silly, but which, the more I see it, has caused me to run through a range of emotions from furious to just plain sad.

It is not my intention to slam the company who made the commercial, and, in fact, it is so irrelevant that I won’t even mention it’s name. Rather, this article, I suppose, is more of a commentary on the social environment in which an ad like this is considered effective. Additionally, the messages in this commercial speak to a larger narrative in the financial services industry, one that continues to obfuscate important issues for everyday savers and investors, making it that much more difficult for them to ultimately succeed.

The ad opens with a well-dressed, middle-aged man sitting alone at a nice restaurant, looking at his watch, presumably because he is waiting for someone to join him. In walks a similarly well-dressed, middle-aged woman who apologizes for being late and sits down. Before he can say anything, she asks if he has heard about a NATO plane that has been shot-down by Russia. When he replies “no”, she continues by explaining that “Markets are a mess” and “Everyone’s selling…if their brokers are up and running.” “It’s 8 o’clock, everything’s closed” he says with a perplexed look, and she replies “That depends who your broker is.” At this point, she pulls out her smartphone and explains that even though it’s after hours, she can trade in Hong Kong, London and elsewhere. She continues by saying “The markets are already down 2%” and she needs “to make some hedging trades…it’ll just take a minute.” The ad ends with the gentleman, a look of wonderment on his face, asking “Wow, who’s your broker?”

Now, I completely understand that there is nothing new about advertisers engaging in hyperbole in order to make their case, and that the purpose of this particular ad is just to illustrate the point that their platform is much more robust than others. Why then, does this commercial bother me so much?

You’ve probably already guessed that I don’t think much of the idea of an average investor trading on any short-term news events such as this, let alone after hours, in some foreign exchange somewhere. The premise that “markets are a mess” and “everyone’s selling” also strikes me as ludicrous. It’s eight o’clock somewhere in America presumably, so what markets are a mess, and who’s selling? Perhaps some markets in Asia are down on the news? It’s unclear. More to the point, even assuming all that is true, unless you’re some kind of hedge-fund manager or institutional trader, who cares? The real danger in all of this is the message to average investors that they need to ‘do something’, one way or the other, every time markets are reacting to short-term events.

While the financial narrative is disturbing, it is the social implications of this commercial that are really bothersome. First, a plane has been shot down. We are initially lulled into thinking this might be a serious conversation, perhaps from the perspective of the potential political ramifications, or more seriously, whether the event could lead to increased tensions or even war. Lest we forget, lives may have been lost, and though the woman actually seems quite concerned when first bringing it up, her “I have to do some hedging trades” is where she takes us. Seriously? Have we really become so indifferent to actual lives that our first reaction to this kind of news is to worry about what’s happening to our investment portfolio?

Second, the woman is late for dinner to begin with, then proceeds to whip out her phone and engage in her trades, all without the slightest concern for the person sitting at the other end of the table. I don’t know about you, but if I were on a date and got treated like that, I wouldn’t have a perplexed look on my face because of being impressed with her brokerage platform, but rather, because I was wondering what is wrong with this person, and how can I get out of here tout de suite.

I suppose this is really why the ad grates on my nerves a little more each time I see it. It is the very picture of what many consider to be a deteriorating society. With no regard to punctuality or anyone else’s time, and perpetually glued to a phone, we are concerned about tragic events only insofar as they affect our own bank accounts. It strikes me as exactly the opposite of how we hope our clients are able to live their lives. We like to talk about investing as merely a tool to help address and achieve goals and use planning and advice as a way to help clients gain perspective and hopefully live a more balanced and fulfilled life. We work extremely hard, as any diligent financial planner should, to coach investors to focus on the big picture, and the journey towards their financial goals and dreams, in an effort to avoid the ‘do something’ trap each time a sensational news event comes along. So when I see this commercial, I guess it makes me feel that all of our efforts to get that message across, are a bit like standing on the beach trying to hold back the ocean.

In the end, the financial services industry and the media will continue to sell fear, while we keep spreading the message to stay calm. And if we, as a community of advisors and planners are successful, you might just notice a lot more people in restaurants, enjoying each other’s company, because they don’t care what short-term effect the latest crisis du jour is having on their portfolio.



The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

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