At The Center Of Every Investment Is…


I love when my kids burp.

In fact the louder the better. I’ve been teaching them for years to let em rip when they feel them coming on.

I especially love it when my seven year old daughter lets a loud one rip.

There are couple of rules around burping. Not in public and no showing off to their friends. They can burp in public of course but they are not allowed to try and make them as loud as they can. They have to be discreet and excuse themselves. Same at home, if they burp they have to say, excuse me.

So why do this?

First, its fun. And I’m pretty sure there isn’t enough fun in the world but even more important  humans burp everyday. It’s something we do. The Chinese figured this out along time ago.

All Investors Live In Their Own Investment Worlds

Plus all homes are small worlds. And I wanted to make my kids world one of okay-ness, fun and acceptance.

Another one of my core teachings with my kids, though much more serious than burping, is something that’s not even allowed to be acknowledged in society today.

Society teaches us this one thing is to be ignored or shamed. And yet this one thing is at the center of almost everything in life and certainly at the center of investing.

What’s at the center of investing?

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Is it the right symbol? The right share? The right allocation? The right stock/bond split? Or the right information?

What if I told you it was none of those.

What if at the center of investing was your feelings. And what if the core feeling that had to be managed, accepted and understood was the feeling of being scared.

But the problem with “scared” is no one is taught to manage it. Or accept it. Or work with it. Very few people “own” their sacred-ness. And please note, I’m purposely not using the adult word, fear, right now.

The Stock Market Reflects Back To You What You Believe To Be True

We might be taught to own happiness or even sadness but not scaredness.

I find this crazy.

Being scared is one of our core emotions. The four are mad, sad, glad and afraid (scared). And yet, we are taught to ignore this feeling. Parents don’t teach their kids about scaredness. Did yours?

And yet right on the other side of scared is most of what people want in their life. And yet, silence. Most people believe this core feeling should not be there. It’s a feeling only four year olds feel about going upstairs by themselves.

Investing is not the study of finance. It’s the study of how people behave with money.

– Moran Housel

In fact it’s only recently that humans are even allowed to be sad but not scared. Again, little kids can be afraid but not adults and certainly not male adults.

It’s only in the last ten years that being sad, depressed or low is even open for discussion.

Talking About Investor Emotions Is Still A Fringe Idea

Look, two thirds of the people reading this post have already zoned out and turned their attention to their next meal. And that’s going to cost them in the next downturn.

I wanted to run an accountability game with a bunch of my guy-friends. And the only rule was that they had to text the rest of us if they didn’t complete their task for the day. And the text was a very specific set of four words in a specific order.

The group had wants like, no sugar for 30 days. No carbs for 30 days. Write in their journal for 30 days. Be in bed by 10pm for thirty days. And so on. Stuff they wanted but weren’t able to follow through with on their own.

And when I told them the one rule. Not one took me up on it.

Well, that’s not true.

One guy said he was in.

But by the second day. His texted the following, and I a quote:

“Life got a bit crazy today at work and home and I had some sugar. But it was a 1/10th of what I would have normally have eaten.”

The rule was, if that tasks was not accomplished, they would have to text the group, “I was scared today.”

That’s it.

They weren’t allowed to explain. They weren’t allowed to say they were busy. And none of them would do it.

‘Scared’ is the third rail of investing.

Let me ask you, why do people hire big-box advisers?

At the core of their choice to hire a big-box adviser is which of the following four core feelings: mad, sad, glad or afraid?

After two plus decades in the business of training people to minimize the loss of their money in the stock market I often find people being…

Worried. Anxious. Frightened. Stressed. Fearful. Hesitant. Unwilling. Disinclined. Slow to act. Reluctant. Frozen. Apprehensive. Nervous. Shocked. Suspicious. Alarmed. Discouraged. Disheartened. Dismayed. Upset. Stunned. Startled. Intimidated. Perplexed. Perturbed. Rattled.

All the words above mean exactly or nearly the same as being afraid.

Someone’s Stock Market Returns Are a Direct Reflection Of How Well Someone Can Manage Their Fear

And I get it, how could we not be afraid of investing. If we lose our savings or our retirement money we have a different future. A future where we might have to go back to work, move to a smaller house or find a less expensive place to live.

The world is complex. The economy is complexed. Humans are complexed. The stock market is complexed. The bond market is complexed.

And at the center of all that complexity is ourselves and our money.  

So the big-box adviser asks your age and your risk tolerance. And this makes sense. Because every experience we’ve had in this entire world, we’ve been at the center of it.

So why shouldn’t investing have us at the center too?

Investors Are At The Center Of Their Investing But Does Their Strategy Have To Be?

And so, smart well meaning people hire big-box advisers because at some point they say, I’m scared to do it on my own, because this investing thing is way too complexed and scary.

I’m not shaming people who have big-box advisers, I understand. I’m pointing out that people go to big-box advisers because they are scared. Scared of losing money. Scared of the complexities. Scared of the future not working out.

But because big-box advisers don’t actively want to minimize losses, their clients get hurt when the market falls.

As we get older we start to see the cracks in the big-box Adviser Approach.

  • Why do they have me in bonds when I have another 30 years to invest?
  • Why do they have me 50% in bonds when bonds have underperformed the stock market for nine years and half of this money is going to my kids?
  • Why do they have me in bonds when there is a perfect track record of bonds falling in price when the FED raise the Federal Funds Rate?
  • Why do they tell me how great their research department is even though their research department didn’t see the 2000 dot com crash nor the global financial crises or nine years of a bull market happening?
  • Why does their research department have me in 70 different equity positions, even though equities all fall together when the market accelerates downward?
  • Who is this “research department” anyway?

The reality we live in is incredibly complex, and we have incredible limitations to see everything we might want to see to have us feel safe.

And so we all seek safety.

Wanting To Feel Safe Is Human

And before someone can trust someone they have to feel safe with that person. Trust only happens after safety.

And in a post-truth-era, how do investors decide who to trust.

They trust a known brand like Fisher Investments, Merrill Lynch, Raymond James, Edward Jones, Ameriprise, and so on.

They trust them because they’ve been around for many decades and that must mean they are safe. But there’s a problem. Those companies all kept their clients money in the market during every downturn.


Because that’s their business model.

I’ll write it again, investing is not the study of finance (or ticker symbols). It’s the study of how people behave with money, and those big-box advisers know their clients are scared.

So they lease nice buildings. And hire good looking people. And talk about research departments. And provide four-color glossy brochures that all say the exact same thing, “go with us, you’ll be safe.”

But is safe a, “buy and hold never get out because the market always comes back?”

Again by Morgan Housel

The finance industry talks too much about what to do, and not enough about what happens in your head when you try to do it. A preference for skills in a field where skills don’t matter if they aren’t matched with the right behavior.

Scaredness is at the center of all investing.

Most people are scared they are going to lose the money they have built up their entire lives. Most people are scared they will miss out on the big move higher.

Scared to lose AND scared to missout.

And yet here we are most of the time talking about XYZ, ABC or 123.

We were taught being scared is bad.

So when that emotion comes up we immediately think something must be wrong. Something must be fixed. Something must be in the bushes with big teeth that is going to kill us.

And so we flight or freeze.

But this does not work in investing.

And the older we get, the more we have to lose.

We don’t have the time. We don’t have the runway. We don’t have 10 more years for the market to come back.

If you are 62, you don’t want to wait until you are 72 for your 62 year old’s wealth to come back. Heck some of us will be dead by then.

So even though we know the market will come back, it doesn’t matter. And even if we were 32, who wants to wait a decade to make our money back?

And so the scared-ness increases as we get older. And this shows up in the data. Investors over the age of 60 grow their money 11 times worse than the market.

That’s a shocking number isn’t it. It sounds ridiculous.

Dalbar Research comes to this conclusion almost every year. Some years maybe it’s only 10x worse or even 9x worse but it’s always worse from the market.

The More Active An Investor Over The Age of 60 Is. The Greater They Underperform

And it doesn’t matter what 20-year block of time Dalbar Research chooses the numbers are always the same. The active investor over the age of 60 constantly hurts themselves.

The market I’m referencing in regards to this research is the bond market.

Why does this happen?

Because older investors cannot outsource their fear to other people. This is why people who hand over their money to big-box advisers still have anxiety. They know something is wrong.

They like their adviser but that overly complex approach is confusing. So confusing that they don’t understand why they need 70 plus positions. Or 20 funds. And didn’t they have 70 plus positions in 2008 when the market fell 38% in one year alone?

But it doesn’t have to be this way.

We want certainty. We want to know it will all work out. We want to know the last 1/3rd of our life will be the most secure.

And honestly it doesn’t matter what symbols or shares were talking about, if an investor hasn’t been trained to manage and understand themselves their money will be at higher risk.

In Your Corner,

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RC Peck, CFP

P.S. It seems weird to be talking about something no one wants to talk about. And yet one phone call could change their entire lives certainty. If you’d like to speak about how investing can be different you can book a call right here.


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