Are you an "Adult" Investor?

Observing the stock market through the eyes of the media and the pundits they enlist -- to tell you why you should buy, sell, hold or panic -- is exactly like watching pornography.  So I’ve heard, I’m no expert on the latter (clearing throat). But much like Supreme Court Justice Potter Stewart said of lewd obscenities, “I know it when I see it.”

The screen is busy with colorful stimulation, moving parts, too close to read, too far away to understand why you’re looking at it. And that’s whether it’s the movements of the shares of a semiconductor supplier out of Dallas or “Debbie Does Dallas.” The two function the same way. The viewer is looking through a lens somebody else has shaped and made malleable for public consumption -- displays of shock and excitement, compelling and titillating to the senses; a drama of winners losers and the screwers and screwed before the very eyes of the voyeur.

The truth of the matter is that the average investor, starting out on Main Street is just as likely to get rich or go to the poor house immediately playing the markets as he is to deliver more than a pizza to someone’s house. But it’s all about instant gratification right? What's sexy about steady growth? This is the message conveyed. And while the "get it while its hot" mentality may work in the unmentionables department it's not how wealth or even a sustainable nest egg is built.

Case in point, real-time television business media, much like the euphemismistic moniker-laden “adult” industry, is a multi-billion dollar racket and for better or for worse they both have they’re place for informing people who want to know and want to “watch” what they think they should learn and see. That’s vague I know but I’m trying to keep this correlation out of the locker room and in a practical reality safe zone.

Uncertainty is the only certainty and that the most of the volatile waves of the everyday goings on the stock, bond and futures markets won’t affect the average investor at all. What money porn does is tries to define randomness and feeds on the individual’s -- for lack of a better word-- lust for knowledge to separate them from the pack by being the first to jump on something when the truth is that one can only hope to grow a fortune gradually. No one consistently beats the house because there are too many variables. Read it again. No one beats the house everytime.

The leveraged buyout craze of the 80s, the "irrational exuberance," of the high-tech 90s, and the subprime crisis we are mired in now are all examples of what started as feel good stories about modern-day gold rushes – the Gordon Gekko’s, the Steve Case’s and the Johnny Housebuyer's of the housing boom profiled via convenient and cheerful "money" shots.

Suddenly when it all falls down, the next emotion evoked is fear, fear of being shamed, fear of looking bad, fear of losing the respect you’ve garnered. These sentinments are again reflected through the bullish-turned-bearish, talking-out-the-side-of-the-neck experts who predicted nirvana in the first place.

So if and when you invest in the capital markets, don’t look for get-rich-quick-tips or do it on the whims of the shiny images or because of the people in sweaters on large boats, the happy couples in commercials or the pinstripe-clad bulge bracket banker telling you what to look for. Remember that live business news is by and large for business people and also that there are ads for financial products and services that are sold against some of these so-called business "reports." Also keep in mind that the object of financial services firms is to sell you products that in many cases underperform but yield transaction fees for these companies nonetheless.

In the end, most people, if they pragmatically persevere, will see modest and respectable percentage gains on diversified portfolios of bonds, value stocks and hard assets such as money in an interest-bearing account or real estate over several decades. But you don't need a blog or a ticker train on a television to know that do you? And don't ask me about specific investments tied to these assertions because unlike many business journalists and so-called certified financial gurus, I'm not afraid to tell you "I don't know." However, what I do know is that philosophy trumps strategy more often than not. Many people roll the dice thinking it'll be them but only a small percentage of folks will “get lucky,” or uh, “make out,” well in the markets. Yeah I had to take it back there: sorry. 

For the most part it should be about growth and patience and a gradual climb to where you want to be. Because while a 600 point "rise" or a "flaccid" 600-point drop may evoke emotion and get the blood pumping, chances are it isn’t going to make you or break you. Enjoy what you will but eventually you have to put away the porn and have a conversation, with yourself of course, about what influences your monetary and investment decisions. Fantasies have their place but not when your money is on the line.

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Will Chen's picture

Excellent point Jabulani.  Much of what you said kind of applies to the 24/7 "horse race" mentality of our political landscape as well.

Myscha Theriault's picture

I found this so clever to read. Thanks.

Guest's picture

You've hit the nail right on the head Jabulani! Once upon a time (I know I'm dating myself here!!) there was not 24/7 news coverage and more specifically 24/7 financial news coverage. Now people think if there is some new information they need to act. No wonder volatility is so high! Great Post!!!