By Alan Steel
In life, we sometimes end up paying for not paying attention.
Think of it like the eventual chiropractic cost that’s barreling towards Generation “Tech-Neck.”
All those billions of bent necks staring down into mobile phones will someday come with a medical cost, not to mention a stark lack of awareness of what’s going on around them in the real world.
Technology is now like a kind of social more, like walking while texting.
The only problem, other than the eventual humpback posture, is when a fountain suddenly jumps out in front of you:
Methinks, “Tech-Neck” is going to be a medical goldmine!
But there’s a deeper lesson here, one that extends far beyond viral video embarrassment and a water-logged iPhone.
In the words of Gary Antonacci of Dual Momentum:
“Wee Willie Keeler was one of the greatest contact hitters in baseball. One year, 30 of Keeler’s 33 home runs were inside the park. Keeler’s motto was, ‘Keep your eye clear, and hit ‘em where they ain’t.’
Hit’em where they ain’t, indeed. What that means is that you shouldn’t be aiming where everyone else is, and that those popular mechanics of investing don’t pay well.
I’ll give you an example. In fact, it’s probably one of the best lessons you can learn in investing. And it starts with a thing called the Normal Distribution Curve.
What that Curve means in simplest terms is that, at any given time in the market there are investments that are overvalued (about 20%), those that are undervalued (also about 20%) and the vast majority of which that are at a relatively fair market price (about 60%). That latter group includes things like index trackers – they track the markets up, then track them back down again and charge you for the ride.
And when you find yourself in that middle ground of investing at a relatively fair market price you have achieved what you might call true mediocrity:
That’s where the investor herd roams; the masses who run to things like Gold, bond funds and ETFs in knee-jerk swells when the headlines run red with bad predictions about things like Brexit, Trump, China, snap general elections, oil price hikes and falls, interest rates, inflation, deflation, stagflation and other such bear market prognostications.
It’s also the zone where the average UK pension pot for 40-somethings has about £50k in it (Thisismoney, 2015).
That’s not quite the type of investment that leads to any real gold in your golden years.
So what portion of that curve above do you think folks should be focused on – overvalued, undervalued or fair market price?
Well, if you said “undervalued” then you’re right. But if your investment strategy is guided by celebrity analysts selling Armageddon hymn books, and the daily headlines pitching “crapflation” copy then you’ll likely never find the right pond to fish in.
But there are people out there who can help you try and escape from those popular mechanics of mediocrity.
Look for someone, an adviser, who can explain the complexities of the markets in simple terms, and who has a real track record of investment success that you can see as easily on a Google search as in their own credentials.
Investment success begins by setting your long-term goals and then by paying attention to what’s going on around you.
So raise your head and look around.
You owe that much to yourself.
Because after all, it’s your money.