Poor Investing is Just a Bad Habit – Lesson Five

by | Nov 29, 2000 | Archives

Here is perhaps the most important lesson of all from the Presidential election.

Dear International Friend,

Icy chills fly up the ridge, now brown and molten in its coat of fall. Frost sings in the leaves' crunch and the forest sleeps starkly dressed in winter' clothes.

Merri and I just added some new land to the farm here and upon returning from Ecuador took an early morning's walk up one of the new ridges we own (this is a strange concept owning land-but that's another story for another time).

On this walk I was thinking about the power of uncertainty and how wonderful and mysterious it is that I rarely achieve my financial goals. Many people think that failing to attain a goal is bad, but long ago my own experience (and observation of others) led me to believe that monetary goals, like New Year's resolutions, are rarely achieved. This is OK!

This simple fact is a profoundly powerful, but an often misunderstood financial truth. I believe the entire concept of setting economic goals is thoroughly misunderstood. Many view these goals as destinations or fixed points that once targeted should never be removed from focus. Many believe that happiness comes from attaining these goals.

The truth is our economic goals are not destinations. They are just beginnings. From these beginnings, our goals lead us into activity. During the activity we find what we are really meant to have, which is rarely what we planned in the first place.

These morning thoughts about goals and uncertainty led me to some economic thinking that relates to the recent course we conducted here at the farm.

These thoughts shifted my current finances from an aggressive stance to one far more conservative. The reality of my goal setting has been much different than the one normally professed by most economic planners. My goals are not my fixed targets. This is because I do not feel that I have the infinite intelligence required to understand all the consequences of the goals I set.

I use goals instead as batteries of thought that spark my feelings and emotions and lead me into some sort of financial action. Because I accept that my intellect is not infinite, I humbly accept that I cannot possibly know all the consequences of my original actions. Once my goals get me started, I then let nature's infinite intelligence direct and guide my course. I start out thinking I know what I want, but usually end up getting something entirely different, but it's always better!

This chain of thinking brought me to two articles I had recently read. The first was about Olestra. Proctor & Gamble has spent $200 million developing this chemical (Olestra will be marketed under the name of Olean) which substitutes fat. Olestra is indigestible so cannot be absorbed. Thus potato chips and other fatty foods if fried in Olestra are not as fattening as those fried in fat. The idea is that people can eat wonderful non fatty-low calorie fatty snacks.

However, if one looks closer this goo has drawbacks. First, since it cannot be absorbed by the digestive system it is excreted undigested and causes underwear stains and gastric trouble, abdominal cramps and loose stools. Then things get worse. Olestra also inhibits the body's absorption of vitamins A,D,E and K plus carotenoids (the stuff found in all the spinach, leafy vegetables, carrots and sweet potatoes our Moms made us eat). According to The Center for Science in Public Interest, a consumer group, this chemical will increase heart disease, cancer and blindness. Yet it is now FDA approved.

This made me realize two facts. First, there are plenty of very undisciplined consumers in the market place. If there are people who are willing to put up with cramps, digestive problems and increased risk of cancer and heart disease just to eat fatty snacks, they must lack discipline to change their diet to improve their health. Second, our government, supposed to serve our best interest, often does not.

What does this have to do with investments? I'll get to that in a moment. First, let's share the second article I pondered on that walk.

The second article was about realistic deer decoys used by game wardens who set them up in no hunting areas and wait for hunters with more temptation than sense. (It is hunting season up here now). When the hunter shoots the decoy, the game warden makes the arrest. They have even introduced a black bear decoy.

Wardens have found that the decoys drive some people crazy. One man even tried to run a deer decoy down in his car. But the black bear story really started me thinking! According to the article, wardens arrested one man who tried to kill a black bear decoy. What made this so interesting is that the man took on the decoy with a knife!

This led me to two thoughts about economics. First, there are some very stupid members who live in our community. Trying to run over a deer is dumb. To take on a black bear with a knife in season or not is even dumber. To not even realize at arm's length that the bear wasn't real is just plain totally stupid, yet this man can probably vote!

The second point is that our government which is supposed to be serving us not only doesn't do such a good job sometimes but is even willing to create situations that lead us into trouble! Now here is the point!

The public gets the politicians they deserve. A stupid and undisciplined public elects stupid politicians and this can cause horrible economic situations. However, I had been operating on the premise that the American public was finally fed up with too much government interfering in their lives and burdening their pocketbooks. I believed the voting public would eventually make intelligent decisions and cause our government to shape up. I felt that a voters' revolution was in the making.

Yet as I walked on the ridge and thought about this incredible lack of discipline and stupidity and about the specific and negative intent on the government's part, I felt I must reconsider my thinking. This recent election sort of proved it to me as I read and heard so much trash from so many candidates.

Here are two delegates upon which the nation cannot decide and neither are likely to do as they promise anyhow!

What all this pointed out to me was a very important point we covered at the course. There is a lot in this world we cannot do a thing about. So learn who you are and what you love. Focus in this and ignore the rest. Ignore the politicians. Ignore stock market fluctuations. Ignore shifts in day to day markets and pat attention to what you love and use to earn money. This is what will make you truly happy and wealthy.

We have learned that we have limited channel capacity. We know that we can go insane if we try to keep up with everything so be wise and concentrate on what you love and do best.

I can now see that the best thing I could have done through the last elections is to have ignored them completely and spent my time researching and writing instead. Or walking more in the woods!

This is a really important lesson. Until next message, good global investing!