Ken Moraif  

The Seven Deadly Sins of investing. Eek, oh my gosh. And by the way, all seven of them. Okay, we’re not going to give you three or four. We’re going to give you all seven. And I’m pretty sure that when I go through these, you’re committing at least one of these, if not all of them. Okay, so let’s go through them. First of all, emotion. Okay? This is where you let your emotions drive your investing. This is when people end up because of their emotions. They buy when they should be selling. They sell when they should be buying. You know, your emotions should not be the guide for when you make an investing decision. Okay, that’s a terrible thing to do, but because it’s our money, and because we care so much about it, and because we want to be financially secure, there’s a lot of emotions involved in that, which is a self serving thing for me to say. Why we think you should have somebody helping you with that, an outside person. The second is disorganization. You know, one of the things that I’ve discovered over the years with people is they have what I call a junk drawer of investments. So what happens is, is that, you know, they’re they’re watching some financial analyst somewhere, and they say, you should buy this. So they do and then they’re reading something on the internet and it says, buy that. They do that. And then their brother in law says, you know, do this, and they do it. And then, you know, so they, little by little, they accumulate basically a junk drawer of investments. And then when it comes time to retirement, it’s like, Oh, they got, like, 1000 things spread out over 1000 places, and that is very, very difficult to manage and to be organized with. So disorganization is a second myopia. So myopia, for those of you who who know that term, if you’re a eye doctor, or for those of you don’t know that term, if you’re not an eye doctor, is that your focus, you don’t see the big picture. You just see that you’re you’re zoomed in, and you don’t see the big picture. The reason why this is a deadly sin is because that’s what causes people to buy things at the top of the market. It causes them to buy things when they shouldn’t, or maybe sell them when they shouldn’t as well. So for example, let’s say that, you know, technology is the big thing, so they myopically zoom in on just that particular segment of the market, and they don’t see the big picture, which may be telling them a totally different thing, that maybe you shouldn’t be buying it at this point. Maybe it’s played itself out. Maybe it’s, you know, so, so not seeing the big picture as being myopic. The next one is impatience. You know, impatience is where you just can’t you can’t help yourself. You know, you got to buy it now. I just, I want to be there, or you just want to sell it now, you don’t want to wait for the right time to do it. You’re just letting impatience drive your decision making. And you know, and the impatience we found with people is incredibly powerful. You know, they call it FOMO fear of missing out. There’s all kinds of psychological studies that have been done on people, and it’s, and that’s called, that’s called being a patient. And again, it goes back to the emotions, but it’s a different version of emotions. And then number five, which is maybe the biggest one, is greed. You know, letting the desire to make a lot of money override your senses. Okay, you’re you fall for false promises. People promise you all kinds of stuff, and they get you all riled up. You get excited. You know, there’s a certain investment that you know, looks like it’s going to go up 1,000% and so the greed takes over, and rational thinking kind of leaves the room. And when that happens, you’ve committed a deadly sin to your investing. Okay? So you got to be, you know, you always have to think of your when you’re making your investments as a business decision. Okay? There’s no greed, there’s no emotions, there’s no myopia. You know, there’s you got to be organized. It’s a business. If you’re investing, it’s a business decision, and you need to act like it’s a business that you’re doing. Number six, arrogance. Now, I know that none of you are guilty of thinking that you’re the smartest person in the room. Okay, so I’m speaking to somebody else here. I get it. But arrogance is one of the biggest deadly sins. Where I know better, you know, the whole market, everybody’s but I am a contrarian, you know, I just know better than everybody else. And or, you know, we’ve had situations. We’ve seen people who were lucky. You know, a lot of times, if you invest and you hit a big home run. It’s not you okay, you got lucky, and so therefore, but the fact that you did get lucky may give you arrogance. And if you are arrogant, then you will override logic, you will override the business decision, and you will make decisions that very likely will hurt you in the long run. And that’s number six. Yes, number seven is kind of the opposite of arrogance, and that’s cowardice. You are so terrified of investing. Oh, the markets, it’s gone up too much. We’re at all time highs. I can’t invest now because it’s going to crash or it’s been going down. And you’re like, No, I don’t want to buy because it’s going to keep going down. I’m gonna lose everything, you know, so you become a coward. And I’ve experienced that personally with, you know, in 2008 or y 2k with people who are so badly burned, and, you know, it’s been so long that right now, I would say we’ve got a whole generation or two of people that have never been through a big, bad bear market. And so not your fault. You’ve been, you know, you’ve lived through a very wonderful period. But you know, I guess use my wisdom, I saw people in y 2k that were so harmed, they were so burned that even though the market came back and ran for five years. They literally could not get themselves to buy in again. They just couldn’t. They became cowards. I want to put all my money in a money market fund where I know what I got and I can’t lose it. And that was it. You could not talk them out of it. They would not invest. They were so scared. And I saw the same thing happen again to people who suffered through the 2008 bear market, which, you know, went down from 57% from peak to trough. That’s a lot of money to lose. And if you get scarred that badly by that, you’re going to become a coward as well. And it’s going to be very difficult to ever invest again. You know, I’m gonna put all my money in CDs, and I’m gonna put my money in money market funds, or whatever it may be. I don’t want any, you know, I don’t want to take any risk at all anymore, because I’m so scared and so cowardice can set in and so, again, self serving comment here, but the way to address all of these is just have somebody else do it for you. One of the biggest recommendations I can make is have a professional working with you, a financial advisor. Many studies have shown that people that use a financial advisor have better outcomes than those that don’t. And it’s because of all these things that I’m talking about here, all these things you’re a human being, they get in your way, and investing your own money is kind of like operating on yourself or operating on a loved one. It’s very hard for you to be dispassionate. I think most surgeons would not operate on their own, husband or wife or their child. They would trust somebody that they think is very good at it to do it for them. Because they’re not, you know, they’re not objective. They’re too involved in the thing. It’s too important. So those are the seven deadly sins of investing. I hope you enjoyed this as much as I enjoyed bringing it to you, and also I hope this found you healthy, wealthy and wise, and we’ll talk soon.