While this is the first entry in this blog, it is certainly not the first time we have communicated our ideas in writing. We have been sending out quarterly commentaries to clients, potential clients, CPAs, attorneys and other professionals since the mid-1990’s and have been sending out an every-other-Friday blast e-mail to that same group of people since late 2008, when it seemed like the world was going to end. In fact, the financial crisis was that genesis of those e-mails, as we wanted to inform people the world was not going to end, even if CNN, MSNBC and Fox continued to tell us that this was the most likely scenario. After all, even President Bush declared, “If money isn’t loosened up, this sucker could go down.” Not exactly a rousing pre-game speech.
I came up with the term “Accidental Investor” years ago when I first thought about writing a book on financial advice. My total progress to date on this project is about five pages, by the way. I came up with that title because very few of us are purposeful, intentional investors. Some financial advisors, are, in fact, more asset-gatherers or salespeople than they are purposeful investors. Some people, at a very early age, knew they wanted to be a fireman or a doctor or a teacher. Very few (maybe Warren Buffett excluded) grew up thinking they want to be a professional investor. Certainly, people outside of the financial services sector are more accidental than purposeful in their investing, even if they spend quite a bit of time worrying over their money.
What exactly is an Accidental Investor, then? It is the person who signs up for the 401(k) at work for the first time, or opens an IRA or invests in a stock after a tip from an uncle or a friend. Money is high on the emotional quotient, so we tend to make decisions quickly, avoiding the agony of thoughtful analysis. We continue down this path until we have an assemblage of investments that have come together by accident, not via a plan or purpose. Maybe we have an index fund in one account or a biotech ETF in another, or maybe we really did buy Apple in 2002. I liken it to the furniture we accumulate over time as we move from the apartment to the starter house to the bigger house. It is all pieces we liked at the time, but somehow they don’t really work together, much less look like a photo spread from Architectural Digest. If we had the money, we would get rid of all of that old stuff and hire a decorator to just make everything flow. (Believe me, if you employ a decorator, you will need a lot of money.) Now, I do not want to imply that professional investors do not have lapses in judgment nor make mistakes. Over the last few years, the majority of people have thought that inflation was coming back after all the rounds of quantitative easing, or QE. This did not happen. One of the biggest widow-maker trades of the last decade has been betting that Japanese government bond yields would go up.
This did not happen either.
The topics we will cover in this blog will be broad-ranging, including links to articles written by people who are smarter than we are. We might just give you the facts, discuss behavioral finance, or just wax philosophical to the point that you may wonder just what it is that we are blathering about. It won’t just be one of us who is writing; most of us will try our hand at it from time to time. Everyone here at WMA is certainly qualified to write on the economy and investments; just head over to the bio pages to verify that. Regardless of who is writing, we will appreciate the time you took to read this blog.