By Melanie Hasty-Grant
THE GREED MONSTER IS BACK
I always tell my clients to be aware of the two beasts that run the markets. Their names are FEAR and GREED. Well right now, the GREED MONSTER is back in full force. The greed monster is more sneaky and difficult to identify than its counterpart FEAR. A person that is fearful can typically identify that they are afraid. The typical response to fear is either “fight or flight.” Clients will tell me, “I’m afraid! I want out!” Greed, on the other hand, is much more shrewd. I see competent, intelligent, and adept people being swept up by the skillful cunning of the greed monster.
I believe that greed is a more clever and sly adversary because it plays on one’s ego, one’s self-pride, the part of one’s psyche that feels that it deserves more! It plays on the part of the mind that feels it’s smarter, and can play the market better than the next guy. The greed monster sounds very similar to the Monday morning quarterback who wants to question every trade with the gift of hindsight. Common statements that I hear from someone afflicted by the greed monster include: “The market is at all time highs. I should be too!” “I want 20% returns!”
It is understandable that people naturally always want to beat the indexes. We do too. However, the market has taught us all over and over that what goes up…also comes down! If you have a good defense (i.e.: protecting you from the downside of the market), your offense doesn’t have to take as much risk because it’s not trying to make up for the 40% loss from the last time. What matters is the results year over year and the score at the end of the game. The market is at all time highs! Mark my words…what goes up, also comes down. The market does not move in only one direction! Folks have to remember that the stock market requires that you think in a counter-intuitive way. Most people feel better and safer in the market when it is high.
When the market is low, folks feel worse and think the market is a bad place to be. Don’t get caught up in the euphoria of the market highs. Don’t allow yourself to get hoodwinked into chasing returns of what did better last month or last year. Be smart. Stay aware. The cure for both fear and greed is to have a solid strategy that you stick with through the market cycles. Getting squeamish midway through a market cycle and changing your strategy is a sure way to achieve negative results.
If you don’t really have a strategy or are working with someone that you are not sure has one either, give us a call. We can help. For more information go to www.waterstonewealth.com or call
Melanie Hasty-Grant, Experienced Licensed Professional Counselor and Managing Principal at Waterstone Private Wealth Management. Securities offered through Cetera Advisor Network LLC. Member FINRA/SIPC.