Points of Few – How to Invest with Opposable Thumbs

By Alan Steel

The very caustic comedienne Bill Hicks once said that we’re supposed to keep evolving, and that evolution did not end with us growing opposable thumbs.

True enough, eh?

Bill was something of a master of amusing diatribes about the world, and how we react to it and one another.

And while most of his more colourful quotes wouldn’t pass even the PG-15 rating here, there is one in particular that sticks with me – and it’s as true about life as it is about investing:

“The world is like a ride in an amusement park. And when you choose to go on it you think it’s real because that’s how powerful our minds are. And the ride goes up and down and round and round. It has thrills and chills and it’s very brightly coloured and it’s very loud and it’s fun, for a while. Some people have been on the ride for a long time and they begin to question: ‘Is this real, or is this just a ride?’ And other people have remembered, and they come back to us, they say, ‘Hey, don’t worry, don’t be afraid, ever, because this is just a ride.’ And we kill those people.”

Evolution is a hard road to travel because folks simply don’t like change. That’s because it always feels much easier to huddle together and assume there’s safety in the bosom of the herd. 

Born To Run…

In fact, I wrote recently about that instinct to pack ourselves together, run at the first sign of danger, and the trials and tribulations of adhering to those more basic instincts in What We’ve Got Here Is A Failure To Communicate:

“Human being are quite literally ‘born to run.’ That’s not just a convenient Bruce Springsteen reference. It’s a song that’s been spun in our heads for millions of years now, dating back to when we hunted and gathered on the Savannah grasslands and communicated in a series of grunts, clicks and whistles. We inherited a type of panic button in the centre of our heads – like an adrenaline-induced trigger that urges us to run away at the first hint of trouble. It’s a genetic build that probably saved our species when animal skins were everyone’s attire, and one that can now decimate investments through knee-jerk reactions to scary financial headlines. It’s been called our Lizard Brain (Amygdala). And it’s the reason why the investor herd reacts as it does to the Wall Street boffin fantasists with new mathematical algorithms that are supposed to stay ahead of negative market movements. It’s also why folks buy into those cleverly named investment products, like Absolute Return Funds, that do anything but what they say on the tin.”

So, in the evolutionary scheme of things, when those opposable thumbs arrived they did so with the need to quite literally “grasp” stuff.

That said, as the clicks and grunts of burgeoning communication became smoke signals, telecommunications and the present day global social media jawbone, our ancestral opinions about what is and is not true or dangerous didn’t really change much. 

In fact, that communal opinion might now be worse.

Drinking From A Firehose…

Michael Batnick of The Irrelevant Investor blog takes this concept on in terms of investing, social media and the volume of information now available to us, when he writes: 

“Twitter is invaluable for people in the industry, but it can be a really difficult and potentially dangerous place if you’re on the outside looking in. It’s hard to know who is full of shit and who is sincerely trying to help. And even when you find the right people, how much weight do you put on what they say? How do you know if they’re right? How do you know what their typical holding period is. How do you know if they’re even trading at all? These are all tricky questions to answer, and even for people in the business who are able to discern all of this, it’s nearly impossible to drink from a fire hose and not lose a few brain cells.”

There’s a real need for investors to evolve away from the inherent urge to run, investments in hand, from scary headlines, the dour-palooza of bear market commentators, and adopt the support of someone who can separate the fly shit from the pepper in all this media noise. 

So maybe those little devices that allow us to touch the other four fingers on each hand and grasp things should serve as daily reminders about our need to adapt and evolve in this highly Darwinian media world.

In fact, good financial advice is a bit like having opposable thumbs – they let you grasp what’s really going on out there.

Don’t invest without it. 

Alan Steel, Chairman, Alan Steel Asset Management

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