The political divisiveness that has percolated since the 2016 election continues to suggest that our ability to view issues from other perspectives is challenged. And that’s a problem not just for our politics, but for our financial lives as well. The allure of a narrow, one-sided perspective is in the simplicity and focus of its message. But that doesn’t make it accurate. As financial advisors, we spend a lot of time reading and thinking about cognitive bias, in other words, how our “hunting stories” may overstate our upside at the expense of the outsider’s objective interpretation.
Richard Singer and Stephanie Connor Arkof of SB Capital Management were recently interviewed for a piece in The Hollywood Reporter’s annual Money & Politics issue.
Buying companies you know or whose products you use offers a persuasive sense of comfort to help combat the risk-taking involved in buying stocks. The strategy has even been touted by notoriously successful professional investors like Warren Buffett and Peter Lynch. Undoubtedly, many investors – including some of you reading this – have even made handsome profits buying the likes of Apple, Amazon, Google or Tesla in recent years. So is there something to this strategy? And if not, why does it seem to work?
As I write this, the US stock markets are kicking off 2017 by reaching for record, all-time highs. So why doesn’t it feel like everyone is exuberant?
Why is the idea of change so powerful? Conventional wisdom would suggest that it offers a more pleasant alternative to a relatively unpleasant reality. But I would argue that it need not be so unequivocal. Change offers the illusion of control over situations which may be complex, opaque and alienating.
Generally one has two choices when responding to the question, “How are you?” The conventional option is to simply respond, “Fine. How are you?” and move on with life. The other choice is to respond honestly in some long, drawn-out monologue for which nobody really has the time or interest to hear. Often honest to a fault, I sometimes take the less conventional route and bore my friends to death.
Identity theft has become one of the fasted growing crimes in America. The Federal Trade Commission has found that 9.9 million American fall victim to identity theft every year. Many of us have personal experience being victims of identity theft. Last fall, my car was broken into and my purse, containing my driver’s license, credit cards, etc. was stolen. Not only was I scared for the safety of myself and my family, but I was now faced with significant financial concerns as the criminals attempted to purchase various items under my name.
Every year now, it seems that tax season brings about a resurgence of financial fraud. As we rely more and more on smartphones, we open up a whole new world to cybercriminals who desire access to our financial accounts, email accounts, text messages, etc.
Not long ago the ten members of our management team found ourselves taking turns climbing solo up a thirty foot telephone pole as part of a two day teambuilding and management retreat. Shouts of “belay on?” and “on belay!” (terms used by rock climbers to indicate whether a safety line has been secured) were heard as we carefully worked our way upward. When you are clinging to handholds thirty feet above the ground a safety line is welcome insurance against disaster.
One of our clients recently contacted me about an email he had received from the IRS. He wanted to know why the IRS would be contacting him by email. And why was the IRS asking him for personal information? Was the email legitimate? A little digging uncovered the answer.