RSSFEAR, FAILURE, AND THE VOICE OF WISDOM
May 3, 2008
The following is a guest post by Tracy Theemes.
In my years of working with women investors I have come to appreciate our ability to acknowledge and manage complex and intense emotion. Does this sound like the words of a psychologist or a financial advisor? I believe that you cannot advise people about their wealth and the market place without a strong understanding of human motivation and behaviour. This will become quite evident as we enter 2008 and experience periods of volatility.
Linked to source page.
Our fears get triggered; we make rash decisions to make the fear go away. Then when we look back and realize we have screwed up it makes us even more fearful. How do we find the inner voice that speaks to us from a place of wisdom? We all know that intuitive voice. It is second nature for most of us to let our intuitions guide us. Why does it get masked when it comes to managing finances and directing our participation in the market?
Jeremy Siegel in his book, “Stocks for the Long Run” (2007) states,
“Fear has a greater grasp on human action than does the impressive weight of historical evidence.”
This statement is the cornerstone of wealth creation. History tells us that the market will inevitably go up. History tells us that inflation will erode our dollars and that eventually buying low and selling high will make us rich. But the impediment we face is the feeling of discomfort that accompany acting upon this knowledge. We must hold on when others sell. We must learn to ignore media hysteria in favour of adhering to our financial plan and riding out the ups and downs with a solid portfolio of diversified holdings.
Linked to source page.
We are tempted to believe that there is a short cut or that someone else knows something that we don’t. We all want to be Bill Gates or at least be someone who worked at Microsoft 25 years ago. These are idiosyncratic events and situations are the foundation of misunderstandings and urban legends. There are definitely unique and individualist ways to garner wealth. I, like you, am fascinated by these stories but they are not the typical pattern. The most tried and true way to increase your wealth is to create surplus, invest the surplus and let time in the market work its magic.
This requires a discipline of thought and action. This necessitates feeling things and ignoring those feelings. For in this one area of your life the wisdom of your inner voice must be unconnected to your emotional predilections. It is natural to feel a mild flutter as you are rising higher and higher on the ski chair. It is unwise to jump off. It is understandable to have a sense of panic when your car slides on some black ice. It is foolhardy to let go of the wheel and thrust yourself out the door.
Linked to source page.
When it comes to investing, you must ignore the noise around you and find the peaceful place that says, “Volatility is natural. Ups and downs are the name of the game. Winners stay in. Winners buy low. Losers panic. Losers are sheep.”
Women are by and large, excellent planners. Women have the wiring for foresight and seeing the big picture. Women are awake to feelings and excellent managers of emotionally laden situations. Women make terrific investors and even better rich people! And all it takes is one simple principle. The wise woman in you must step out in faith for the future and allow the knowledge of the past to dictate her response to the present.
Tracy Theemes, MA, CFP, Investment Advisor
RBC Dominion Securities, Vancouver, BC
www.tracytheemes.ca
The information contained herein has been obtained from sources believed to be reliable at the time obtained but neither RBC Dominion Securities Inc. nor its employees, agents, or information suppliers can guarantee its accuracy or completeness. This report is not and under no circumstances is to be construed as an offer to sell or the solicitation of an offer to buy any securities. This report is furnished on the basis and understanding that neither RBC Dominion Securities Inc. nor its employees, agents, or information suppliers is to be under any responsibility or liability whatsoever in respect thereof. The inventories of RBC Dominion Securities Inc. may from time to time include securities mentioned herein.
RBC Dominion Securities Inc.* and Royal Bank of Canada are separate corporate entities which are affiliated. *Member CIPF. ®Registered trademark of Royal Bank of Canada. Used under licence. RBC Dominion Securities is a registered trademark of Royal Bank of Canada. Used under licence. ©Copyright 2008. All rights reserved.
(You’ve met Tracy before in the articles What Does Money Mean To You? and Do You Allow Someone Else To Control Your Money?)
Tracy - Please accept our sincere thanks for bringing us awareness of an issue whose importance cannot be overstated, and yet is too often a black box of fear and lack of understanding. You have a unique perspective as a financial advisor and a woman with empathy for the lives and thoughts of real women. In your rational voice, you empower us with knowledge and confidence. C.
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