Crossed Wires
“Most financial debates are people with different time horizons talking over each other.”
Morgan Housel
Have we always been this argumentative? Politically, historically, culturally - it can often feel like we have never been further apart.
It’s probably always been in our nature, but I think it is beyond debate now that social media has amplified the worst of our most tribal instincts.
We now live in a bear market for nuance - the internet demanding that on every conceivable issue we must pick. a. side. There can be no grey areas anymore.
Smarter minds than mine can do a better job of pointing out the dangers of such polarisation for society, but when it comes to investing - these debates are particularly unhelpful. Because every single investor on the planet is working towards a common goal.
Everyone is trying to make money, to benefit themselves and their families.
And if we subscribe to Housel’s framing that almost every investment debate can ultimately be boiled down to one factor - two people with different time horizons talking over the top of each other, we can see just how pointless 99.9% of these arguments are.
Let me give you an example.
It is incredibly fashionable for financial advisers to slag off the media. Bombastic headlines about matters that mostly don’t matter, designed to panic the individual into taking potentially irreversible, probably sub-optimal action with their money.
But when we consider that the financial journalist only cares about generating maximum engagement with their piece over a twenty four hour period - we see that they are simply playing a different game to us. We might even do the same if we were in their shoes.
So when one of these kinds of pieces gets traction1, we would do well to remember that it makes intuitive sense for the journo, who has a deadline to meet and a family to feed, to write exactly what they have written. They can only care about dealing with the task at hand.
If we are long term investors, with anything over a ten year time horizon, it makes very little sense to be offended.
This kind of content can’t possibly wind us up, for it is irrelevant to us.
The stock picking Investment Manager who watches the markets all day every day. The “buy and hold” index investor who decides they have better things to do. The crypto evangelist. The Jittery Jonny who has been trapped in cash since the GFC. The degenerate day trader YOLO-ing into meme stocks.
Although their actions may look insane to others, each of their decisions may make perfect sense in the context of their personal experiences and/or their incentives.
There is a whole world of opinion out there. That is what makes a market. The world would be so boring if we all agreed on everything.
The trick is to take the time to determine what matters to you. To understand your guiding light, remain laser focussed on the game you are playing and remain vigilant that a lot of other people will be playing a different game. And that is fine!
Earnest disagreement is a wonderful thing. It allows us to revisit our first principles, remind ourselves why we believe what we believe. And if we listen really carefully, every once in a while, we might even learn something new.
Have a great weekend.
None of the above is intended to represent advice to any individual. If you have queries about your individual situation, then you can contact me at david@beechgrovefinancialplanning.co.uk or consult with another regulated financial adviser.