In some activities, it makes sense to scan the horizon for signals about how we should behave. If you are climbing, it makes sense to carefully watch for signals of a change in the weather that might require you to change your route or descend before you reach the summit to avoid injury or death. If you are a shepherd, it is part of your job to be constantly looking for clues or signs of dangerous predators. For our early ancestors, being on the lookout for signals, interpreting signals, and then taking action was required for survival.
We are hardwired to repeat the cycle of our ancestors:
Look for signals >> Interpret >> Act
When it comes to making smart financial decisions, these genetic wires cause major problems. On an emotional level, we feel that the same rules must apply. We need to be on constant watch for signals that we need to interpret, and then we must act.
But making smart financial decisions does not work that way.
In today’s 24/7 world, we are still looking for signals that will help us survive. Since the loudest signals seem to come from the financial media (the financial entertainment or speculation industry), we start to think that it must matter, that it must be important. So we engage in the same activity: we wake up, fire up CNBC, and watch Cramer. We think that we are just doing what is required for survival, looking for signals. Then, rather than recognize this noise for what it is, we call it NEWS. Then genetics kick in. We try to interpret. Then we act.
Two huge problems:
- This signal is nothing more than noise! It is entertainment and entertainment and investing DO NOT MIX.
- In this case our survival actually depends on us doing nothing. Making financial decisions based on NOISE is the worst thing we can do.
Once we have a solid financial plan*, the most important thing we can do is NOTHING. The louder the NOISE, the more important it becomes to ignore it.
At times like these, the only logical conclusion is to go on a MEDIA FAST.
(*Now, if you don’t have a solid financial plan all bets are off.)
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