Empowering Your Financial Future

Written by Jonathan Citrin – September 30, 2009
Published by Detroiter Online

Our teen years are filled with bad decisions based on emotions. Parents stress trying to correct repeated mistakes made over and again by their children. The irony is that these same parents are just as guilty when it comes to their own financial choices. They made decisions about how much house to buy based on greed. They allocated capital to stocks based on the markets going up and a teenage mindset of invincibility. They got burned. Now, they refuse to learn from history and continue to make the same mistakes, yet again.

I guess I just don't get it. While it is mildly interesting to hear banter between the bulls predicting a run and the bears preaching a bull trap, I would never let someone's opinions or the last few months of market movement impact my portfolio selections. Who really cares if we are in a new bull market not to be missed or a bear market rally that will trap the foolishly too eager bulls? It has no bearing on whether someone should be a long-term equity owner of a company or what percentage someone should have in risky assets.

Am I naïve for this? I think not. What indeed is childish is continuing to make the same mistakes over and again. Everything and nothing has changed. The global economic landscape was obliterated last fall. Yet, our foolish decision-making has remained. This constant may eventually collapse us all, not just the banks. For now it has only increased speculation and shrunk the central powers on Wall Street to an even more select few with an even firmer grip on Washington.

It does not matter what the TV tells us or that the markets happen to be going up. What matters is how much you are willing to put at risk, how much you have in the markets to begin with, and what makes the most sense for you and your situation. The markets are not dissimilar to other aspects of life — someone who pulled out probably shouldn't have been there in the first place. And that very same person should not be putting capital back in now. Are we at the bottom, the top, on the way up, on the way down? Who cares? Really.

We have not learned anything. We walked around all winter saying how dreadful things are and how terrible it was that we let things get this bad. The economic crash propelled a presidential candidate as we looked for change, for something to cling to in a time of difficulty. But, and this is the second irony, we didn't really want change — just the pretty package it came in. We wanted a quick fix and the ability to get back to life as we knew it. We were a hung over teenager looking for a special concoction to quickly cure our awful headache. And now, only hours past that feeling, we drink again.

With this in mind, it is important to remember that we are not teenagers. We are adults that should know better. Not about stocks and bonds, but about life and its lessons. About controlling our emotions. About practicing what we preach. About the risks of solely blaming politicians, deregulation, and greedy Wall Street. We were greedy too, and still are. The vehicle changes, but the game is still the same. Children point their finger, but adults accept blame when it is due. Shame on us, we deserve what we get.

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