"They"

by Michael Antonelli, Market Strategist, Baird

What they said, what they bought, when they sold, how they did it.

“They” could be a friend, a neighbor, a co-worker, or a buddy at the club. Whoever they are, they can be one of the biggest obstacles to success for financial advisors and their clients.

“They are doing better than me”

“They are sitting in cash while the market sells off”

“They are making so much money in sectors I’m not in”

If you hear about a financial win while you’re struggling, it’s going to drive you crazy.

Never mind the fact that you have no idea what that person’s goals are, or what their risk tolerance is, or how many losses they have.

If any of this sounds familiar, you’re dealing with the absolute worst of the deadly sins, envy. It can infect anyone from time to time, even the wisest people.

Let me push back against whoever “they” are in your life by dispelling a few notions.

1. They won’t always make the right call. Say that person did go to cash at the start of 2022…was it luck? Have they been in and out of stocks the past decade trying to avoid scary headlines and missing out on huge returns?
2. They don’t have a magic bullet.They aren’t running some magic system no one knows about. They haven’t cracked the secrets to outperforming that 160,000 CFAs and 22,000 hedge funds mysteriously haven’t discovered yet.
3. They probably aren’t telling you about their losses. You probably won’t hear about the time they bought XYZ and it went down 50%. When’s the last time you heard “I’m making so much money but let’s talk about my losses too!” I’ll wait.
4. They can’t avoid all losses and neither can you. If you told your advisor to sell every time the market drops 5%, you’d be selling—on average—3 times a year.  If you told them to sell every time the market drops 10%, you’d basically be doing it every single year. Warren Buffet, Mike Antonelli, and Peter Lynch all lost money while investing (can you believe I put myself in there?).
5. They aren’t you and you aren’t them. Who you are as an investor has been shaped by your journey. The way you view risk and reward, the way you view politics and markets, the kind of investments you are willing to put your hard-earned money into, what allows you to sleep at night. All of that is unique to you and the life lessons that have brought you this far. It will NEVER match up to those around you.

Now I’m not saying that friends and family can’t have great advice, or that what they are doing couldn’t help you out at times. If “they” are doing well be happy for them, karma smiles on those who celebrate the success of others.

But before you make a change, I implore you to talk it through with someone (your advisor is the prime candidate). Don’t abandon your plan because of a surface-level conversation that’s not even about you.

We all just went through a horrible year where most investors lost money. Allow yourself some grace. Maybe you bought a stock and it went down, maybe you bought the dip and stocks continued to fall, maybe you thought you could handle more risk and found out you couldn’t.

None of that makes what “they” are doing the answer for you. The answer is learning to cope with setbacks as they arise and to not let them overwhelm you, for therein lies the wisdom of the ages.

When it comes to your money focus on what’s right for YOU and continue marching down the path of life with your head held high, for one day soon the winds of fortune will once again fill your sails.

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