Fear is everywhere. Our politicians scare us about a doomed future if they aren’t elected or if any of their policy proposals are rejected. TV reporters paint fearful pictures of our communities, our nation and our world by the images and news that incite fear and negativity – right in your home’s 75 monstrous inches of full HD 1080p resolution – searing into our minds. Rolling Stone magazine declares we are living in the age of fear.
Fear is riveting
Our forecasters continually speak of the problems in the economy and the impending recession. Preachers talk about scary consequences if you don’t join their church and send them that donation. There are scandalous stories about people who even talk about scandals for a living, and each episode validates our negativity and feeds into our fear. Human trust is at an all time low, thanks to the talking heads in media and politics.
Result? People put their money in their 0.1% interest bearing account or stuff it under their mattress (both are practically the same). Some are so fearful that they are even willing to pay the government to keep their money safely for 10 years. Risk tolerance is practically absent while our deep-rooted fear and negativity have turned us into nervous nellies in life and finance. We retreat to our cocoons while some even pull the trigger (either the gun in extreme cases or through dangerous words) at the slightest hint of trouble. Some are so convinced about a horrendous fate that awaits humans that they spend all their money and don’t bother to save for the future, an inevitable scenario in their mind where everyone anyway turns into zombies or are utterly ravaged by constant terrorism and incurable disease.
I get it. Fear sells – the appeal is lymbic. Loss aversion is a big part of why most people are glued to every bit of fearful news. We are told about the fear but not about the probability. In investing, more wealth has been lost protecting against disaster than, well…the disaster itself. Think about the millions of people who cashed out at the depth of the Great Recession in 2008-09 and never got back in. They missed on the S&P 500 more than tripling from that low in March 2009. That’s gotta hurt a lot worse than the 9 months of decline from June 2008-March 2009 for those who stayed invested.
Guys, chill out! Stop this fear-mongering. It is said a lie travels halfway around the world before the truth can even put its pants on. If the continual feeding of a fearful future defines you, then why risk getting out of bed every morning as you could die falling from your bed and just walking around the house.
There should be a warning message below the screen on all such fear-mongering media and political speeches. Believing in this shit too much is hazardous to your mental and financial health!
Wealth is made from Love, not fear
The big truths are subtle and work silently, but the fearful fringes are loud and sensational. Love conquers all, some say, but not in the media obviously.
The world has a large majority of beautiful places filled with large majority of wonderfully ‘normal’ people working to improve their life and their families every day. Even the most dangerous cities in the world have many peaceful neighborhoods and majority of law-abiding decent people. If you don’t believe this, then you and I don’t live in the same world! This also means you don’t believe in facts and real numbers.
My dad, who was freelance journalist, often reminded me “Dog bites man is not news, but man bites dog is news.” The meaning, of course, is that media reports – by design – cover exceptions rather than the rule. Majority is boring, the freakish fringes are newsworthy. Just because you hear a lot about a 0.1% probability event doesn’t make the odds of it happening any higher. It does not, by definition, happen 99.9% of the time.
Whether love for investing, fellow humans, self-improvement, or the love of success that inspires you to take on risk, or love for life so you plan for a long retirement, despite other risk factors, love is a proxy for eternal optimism about the future. Wealth is made from love, not fear.
Take bloggers like Financial Samurai, MMM, J.Money, Green Swan, PoF, GoCurryCracker, Jim Collins, 1500, ERN, Mr. Tako, Joe, FireCracker and myself, for example (to name just a few among many). We are all die-hard optimists, and lovable too 🙂 We have to be! For we have a substantial portion of our wealth in the ‘risky’ markets. For anyone with major investments in equity or even investment real estate, you must have love for a glorious future for yourself and human progress.
Think about it. If you don’t expect Coca-Cola, McDonalds, Apple, Google, Amazon, Cisco, Qualcomm (to name a few) and even ‘boring’ utilities like Southern Company, AT&T (ok, it is a telecom company, but practically like a utility) to exist 20, 30 or 50 years from now, why would you invest in any of them or even in a collection of 500 large companies called S&P 500 index? Or, why would you buy a multi-unit rental building if you don’t expect the local economy to be stronger in the future?
Our love for a better future runs deep. We don’t subscribe to the fear-mongering bozos who sell fear for their own personal profit. Very few have called them for it. There, I called them…bozos, for who they truly are.
Today, I am appealing to you all stop believing in this nonsense about a coming apocalypse or a horrendous future. There is no need to repent, unless you have personally done something wrong. If – against all odds – the feared future is here, you will find a way to survive and thrive in it. Have that confidence about yourself.
Safe withdrawal rates are indeed safe at 4% not just because of the numbers but because of your adaptability. If your fear stops you from believing that, then you don’t have a money problem but something else to work on. It doesn’t matter who becomes President or Prime Minister or Chancellor, our future will certainly be better than the past. The human race progresses, not in a straight line, but in a ragged way onward and upward. There will be periods of stagnation or pullback, but on the whole, it will progress forward, relentlessly. Sure, we will occasionally stumble (like recessions, job losses, failed policies and even wars), but we will get up and press on. Why? Because we are persistent, and nobody can stop the progress of persistent people.
I will leave you with one of my favorite quotes. This was true in 1916, still true in 2016 and will be true in 2116. If you truly understand this, you will have no worries about being invested in stocks, as the equity market is a score-keeper of a better future that awaits all of us. Travel safely and fearlessly, my 10! friends.
“Nothing in this world can take the place of persistence. Talent will not; nothing is more common than unsuccessful people with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan ‘press on‘ has solved and always will solve the problems of the human race.”
Calvin Coolidge, 30th President of the United States (1923-29).
Raman Venkatesh is the founder of Ten Factorial Rocks. Raman is a ‘Gen X’ corporate executive in his mid 40’s. In addition to having a Ph.D. in engineering, he has worked in almost all continents of the world. Ten Factorial Rocks (TFR) was created to chronicle his journey towards retirement while sharing his views on the absurdities and pitfalls along the way. The name was taken from the mathematical function 10! (ten factorial) which is equal to 10 x 9 x 8 x 7 x 6 x 5 x 4 x 3 x 2 x 1 = 3,628,800.
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