Regardless of one’s political leanings, there seems to be a consensus among those that I talk with; frequent Tweets often do more harm than good. Let’s not single out Twitter, for it’s not the specific tool that’s the problem. The same can be said of Facebook, Instagram, etc…choose your medium. The concern many of us seem to share is the immediacy that we’re able to exercise when sending our innermost thoughts out to the world, yes THE WORLD. Not only can this have unintended consequences for politicians or emotional teenagers, but this very human tendency can cause problems for investors as well.
When a person chooses to invest in the stock or bond markets, a few critical elements must be present before investing: a solid financial standing (little debt and an adequate emergency fund), a long-term focus, and an understanding that we’re all emotional and susceptible to making unwise emotional decisions about our investments. Like an errant Tweet, an emotional investing decision can potentially unravel months or years of gains.
At the risk of sounding cliché, the great investor, Warren Buffet, says he prefers to buy stocks and hold them forever. While that’s generally not the case – he does sell companies – it’s this ultra-long focus that makes him the go-to-guy when the markets throw tantrums and threaten to unravel the entire economy in an instant. He has that cool hand that we all covet but don’t always possess ourselves. This is one reason why do-it-yourself investors aren’t all Warren Buffet: being so close to the ‘sell’ button is akin to having the wherewithal to send out that very regrettable Tweet or Facebook post precisely when you’re most emotional and least rational. Bad things can happen.
Ultimately, these examples are a function of one’s life philosophy. Having put some thought to how social media (or the tongue) should be managed and how investments should be managed are not all that different. If one desires long-term peace and security, we must have measures in place to circumvent the very human nature with which we all struggle. I don’t know how that works for your social media strategy, other than taking the apps off our phones, but investors can employ an advisor to act as that voice of reason when the itch to react emotionally becomes almost unbearable.
Now, this isn’t to say that there’s never reason to Tweet or sell investments. That would be silly and extreme. The intention is to be thoughtful about such things, ideally having an objective in mind and a strategy in place that frees us up to enjoy the process, rather than becoming a slave to emotion and possibly regret.
If you’d like to follow me on Twitter…well, there’s not much there. I’m human too and have stepped away from those temptations to say regrettable things. So far, so good, but it’s a battle that ends only when I do. Until then, happy Tweeting and long-term investing.
All the best,
Adam Cufr, RICP®
