A verbal crop-dusting

Years ago, I had a window seat on a flight to Boston.  Shortly before takeoff, the lady next to me leaned over and said: “I’m a nervous flyer. So if we hit turbulence, you’ll need to talk to me until it’s over, or I’ll have a panic attack.”  I’ll take “Worst Pickup Lines Ever” for 400, Alex!

This occurred before noise-canceling headphones, so my options were to fake a sudden illness, be rude (which isn’t my style), or grin and bear it.  Like a deer in the headlights, I chose door #3.  How bad could it get?

The air was angry that day, my friends.  The only relief I got came when we touched down at Logan Airport.  By then, I had heard her entire life story and, somehow, I was able to stay awake.  If I recall, she asked me one question during the entire flight.  The other 98% of the time it was a verbal crop-dusting.

So why do some people get nervous or even panic-stricken when it comes to turbulence?  Could it be the realization they are not in control?  Seasoned pilots aren’t fazed when they encounter turbulence. Is it because they expect turbulence and regard it as completely normal?

The same theory applies to investing.  Markets become choppy from time to time, but it’s temporary and part of the deal.  To get the return, you have to accept the risk. To get to your destination you often need to endure some bumps in the road.

Neither you nor I can control/predict/influence what happens in the market.  Here’s what we can focus our time and energy on:

  • Your plan – What are your long-term goals and what can you do in the near-term to move you closer to attaining them? How can we help?
  • Your costs – The biggest determinant of the success or failure of an investment is fees. Lower costs mean more money is compounding for you instead of someone else.  What are the fees and opportunity costs of the investments you’re in?  Let us do an all-in cost comparison for you.
  • Your behavior – What do you do when the markets experience turbulence? Do you talk about it like the nervous flyer above, or do you react and make a costly mistake?  This is where a trusted advisor earns their keep.  Part of our job is to pilot you through financial turbulence and help you keep your eyes on the horizon.

To be successful, an investor needs to accept that they are not in control of the outcome.  In coachspeak, this means trusting the process.  If you don’t have a process, then you need to trust someone who does.

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