Avoiding messages of fear about the stock market(Read article summary)
Most investors should hold onto their investments despite short-term fluctuations in the market, keeping an eye on longer-term financial goals rather than short-term results.
A commercial airing recently on financial news channels has caused me to run through a range of emotions from furious to just plain sad.
The ad opens with a well-dressed man sitting alone in a nice restaurant, looking at his watch. In walks a similarly well-dressed woman, who sits down and apologizes for being late for dinner. Before he can say anything, she asks whether he has heard about the NATO plane that Russia has shot down.
When he replies that he hasn’t, she explains that “markets are a mess” and “everybody’s selling … if their brokers are up and running.”
“It’s almost 8,” he says, perplexed. “Everything’s closed.”
“That depends who your broker is,” she replies.
She pulls out her smartphone and explains that even though it’s after hours, she can trade in Hong Kong, London and elsewhere. “The market’s already down 2%,” she continues. She needs “to do some hedging trades … it’ll just take a minute.”
The ad ends with the gentleman, a look of wonderment on his face, asking, “Wow, who’s your broker?”
The folly of ‘doing something’
It is not my intention to slam the company that made the commercial, and that part is not important. This is more of a commentary on the social environment in which an ad like this is considered effective, and on a larger narrative in the financial services industry that makes it more difficult for everyday savers and investors to ultimately succeed.
I completely understand that there is nothing new about advertisers engaging in hyperbole to make their case, and that the purpose of this particular ad is to claim that this company’s platform is more robust than others. Why, then, does this commercial bother me so much?
You’ve probably already guessed that I don’t think much of the idea of an average investor trading on any short-term news event, let alone after hours, in a foreign exchange. More to the point: Unless you’re a hedge-fund manager or institutional trader, who cares? The real danger in all of this is the message to average investors that they need to “do something” every time markets are reacting to short-term events.
The social implications of this commercial are particularly bothersome. The mention of a downed plane initially leads viewers to think this might be a serious conversation about politics, lives lost, or potential war. Though the woman seems concerned about the incident at first, it turns out she’s interested only in making some “hedging trades.”
Have we really become so indifferent to actual lives that our first reaction to this kind of news is to worry about what’s happening to our investment portfolios?
Financial planning should contain perspective
Other aspects of the commercial are troubling. The woman, already late for dinner, proceeds to whip out her phone and engage in her trades, all without the slightest concern for the person sitting at the other end of the table. If I were treated like that, I wouldn’t be impressed with my date’s brokerage platform. I’d be wondering how to get out of there as soon as possible.
This is why the ad grates on my nerves a little more each time I see it. It is the very picture of what many consider to be a deteriorating society. With no regard for punctuality or anyone else’s time, and while perpetually glued to a phone, we are concerned about tragic events only insofar as they affect our own bank accounts.
Investing should be merely a tool to help address and achieve goals, and financial planning should be a way to help clients gain perspective and live more balanced, fulfilled lives. Diligent financial planners work hard to coach investors to focus on their larger financial goals. Implicit in this is to avoid the “do something” trap during sensational news events.
This commercial makes me feel that all our efforts to get that message across are like standing on the beach trying to hold back the ocean.
While the world at large will continue to sell fear, the community of advisors and planners will counsel calm. If we are successful, you might just notice a lot more people in restaurants enjoying each other’s company, as they don’t care what short-term effect the crisis du jour is having on their portfolios.