Avoiding messages of fear about the stock market
Most investors should hold onto their investments despite short-term fluctuations in the market, keeping an eye on longer-term financial goals rather than short-term results.聽
Most investors should hold onto their investments despite short-term fluctuations in the market, keeping an eye on longer-term financial goals rather than short-term results.聽
A聽commercial airing recently on financial news channels has caused me to run through a range of emotions from furious to just plain sad.
The ad opens with a well-dressed man sitting alone in a nice restaurant, looking at his watch. In walks a similarly well-dressed woman, who sits down and apologizes for being late for dinner. Before he can say anything, she asks whether he has heard about the NATO plane that Russia has shot down.
When he replies that he hasn鈥檛, she explains that 鈥渕arkets are a mess鈥� and 鈥渆verybody鈥檚 selling 鈥� if their brokers are up and running.鈥�
鈥淚t鈥檚 almost 8,鈥� he says, perplexed. 鈥淓verything鈥檚 closed.鈥�
鈥淭hat depends who your broker is,鈥� she replies.
She pulls out her smartphone and explains that even though it鈥檚 after hours, she can trade in Hong Kong, London and elsewhere. 鈥淭he market鈥檚 already down 2%,鈥� she continues. She needs 鈥渢o do some hedging trades 鈥� it鈥檒l just take a minute.鈥�
The ad ends with the gentleman, a look of wonderment on his face, asking, 鈥淲ow, who鈥檚 your broker?鈥�
The folly of 鈥榙oing something鈥�
It is not my intention to slam the company that made the commercial, and that part is not important. This is more of a commentary on the social environment in which an ad like this is considered effective, and on a larger narrative in the financial services industry that makes it more difficult for everyday savers and investors to ultimately succeed.
I completely understand that there is nothing new about advertisers engaging in hyperbole to make their case, and that the purpose of this particular ad is to claim聽that this聽company鈥檚聽platform is more robust than others. Why, then, does this commercial bother me so much?
You鈥檝e probably already guessed that I don鈥檛 think much of the idea of an average investor trading on any short-term news event, let alone after hours, in a foreign exchange. More to the point: Unless you鈥檙e a聽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 鈥渄o something鈥� every time markets are reacting to short-term events.
The social implications of this commercial are particularly bothersome. The mention of a downed plane initially leads viewers to think this聽might be a serious conversation about politics, lives lost, or potential war.聽Though the woman seems concerned about the incident at first, it turns out she鈥檚 interested only in making some 鈥渉edging trades.鈥�
Have we really become so indifferent to actual lives that our first reaction to this kind of news is to worry about what鈥檚 happening to our investment portfolios?
Financial planning should contain perspective
Other aspects of the commercial are troubling. The woman, already late for dinner, 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. If I were treated like that, I wouldn鈥檛 be impressed with my date鈥檚 brokerage platform. I鈥檇 be聽wondering how to get out of there as soon as possible.
This is 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 for聽punctuality or anyone else鈥檚 time, and while perpetually glued to a phone, we are concerned about tragic events only insofar as they affect our own bank accounts.
Investing should be merely a tool to help address and achieve goals, and financial planning should be a way to help clients gain perspective and live more balanced, fulfilled lives. Diligent financial planners work hard to coach investors to focus on their larger financial goals. Implicit in this is to avoid the 鈥渄o something鈥� trap聽during sensational news events.
This commercial makes me feel that all our efforts to get that message across are like聽standing on the beach trying to hold back the ocean.
While the world at large聽will continue to sell fear, the community of advisors and planners will counsel calm. If we are successful, you might just notice a lot more people in restaurants enjoying each other鈥檚 company, as聽they don鈥檛 care what short-term effect the crisis du jour is having on their portfolios.
Gavin DiStasi is a financial planner and the co-founder of Topel & DiStasi Wealth Management. This article first appeared in NerdWallet.