Good morning & happy Monday!
“Fear is the foundation of most governments.”
John Adams, one of the founding fathers
I’m not sure if you have noticed it, but there is an election tomorrow. 😉
The good news is that the non-stop commercials, robo calls, and mailings will stop, thank goodness.
I follow politics fairly closely and was thinking about how political campaigns are run in our country. Fear is a dominant characteristic of a successful campaign.
You name the fear and the politicians will pounce on it.
The economy, inflation, crime, abortion, open borders, climate, taxes, energy, Covid, election integrity, government power, education, religious liberty, health care, Social Security, I can keep going … there’s a lot to be concerned about … and politicians are more than happen to jump on any or all of these items to scare you into voting for them.
“If you elect this guy, your streets will be less safe”
“Electing her will result in you paying higher taxes”
“If so-and-so becomes your representative, you’ll be paying $10 for a gallon of gas”
On and on it goes.
Why do politicians and all their ads go so negative? 3 words: because it works.
Turns out that people are oftentimes more motivated to vote AGAINST someone than they are to vote FOR someone. In the last 2 presidential election cycles we saw this play out. This is not a scientific pole, but in talking with lots of people I think Donald Trump won in 2016 more so because people were voting AGAINST Hillary Clinton. In 2020 I think Joe Biden won more so because people were voting AGAINST Donald Trump.
Ask Democrats; they are scared of Donald Trump. Ask Republicans; they are scared of Hillary Clinton.
Fear is an exceptionally powerful tool for politicians … and all entities seeking your attention.
The media, the financial media in particular, are fully aware of this which is why it’s non-stop, wall-to-wall coverage of doomsday events. The more scared you are the more you watch their programs and click on their articles … and the more ads they can sell.
What is the news? The news is journalists going around the world to find the worst things that are happening and then tell you all about them for 45 minutes over an hour (with 15 minutes of commercials that will try to instill fear in you, so you buy their product). And we wonder why there is so much depression in our world!!!
It’s not normal for a murder to happen in a safe neighborhood, or a plane to skid off the runway, or an earthquake to happen … the reason they are “news” is precisely because it’s not normal.
We saw this during the news coverage following Hurricane Ian. What got lots of news coverage? A few looters who took advantage of the situation. But there were thousands of people helping each other, businesses supported their communities, churches sent massive numbers of volunteers, non-profits mobilized to offer support … how much news coverage did that get? Very little … good news does not sell … fear sells. The media is in the fear selling business.
Fear is such a powerful emotion, and it has the potential to cause us to make foolish decisions. Example: “I’m so fearful I might lose all my money so I am going to sell all of my investments and move to cash.” Such decisions may seem logical at the time, but once the fear subsides we can oftentimes see the lack of wisdom in such decisions.
I’m going to repeat a quote I shared a couple of weeks ago from famous investor Peter Lynch: “The real key to making money in stocks is not to get scared out of them.”
My main point in all of this is to encourage you to not make fear-based decisions. I will always encourage you to make plan-based, goal-based, fact-based decisions … using any type of emotion-based decisions (fear, excitement, a hunch, etc.) opens the door to the potential for tremendous regret.
We make investment decisions based on facts not fear, history not headlines, logic not lunacy.
Tomorrow is the mid-term elections, Wednesday the media will be in a frenzy analyzing them, and then by the end of the week guess what will be happening? Discussion about the presidential election in 2024. And the cycle of fear-based political messaging will resume.
But we are wise enough to realize that any attempt by the media to scare us out of successful investing strategies will be unsuccessful. We will prevail despite their best attempts to derail us. It is an incredible honor to be with you on this journey. Please never hesitate to reach out with any questions, thoughts, concerns. We are always glad to hear from you.