I drove my mother to Atlantic City on Saturday. I don’t gamble (except in poker games with friends) So I spent much of the day sitting on a bench on the boardwalk writing articles for the web site.
One of them is entitled “Investor Emotions.” The article attempts to correlate the emotion with the greatest influence on investor psychology at a given time with the P/E10 value that applies at that time. It’s highly tentative stuff. But it’s potentially highly significant stuff too.
Our most important finding of recent years is that investing is primarily an emotional endeavor and only secondarily a rational endeavor. Most investing guides focus on the rational side of the equation. So most investing guides miss the most important part of the story. Our job is to address the issues that have been widely overlooked and that are thus not yet well-understood.
When the job is done right, there are great rewards. I believe that we will be able to help many people win financial freedom many years sooner than would otherwise have been possible.
There’s a certain Yuckiness Factor that goes with the job, however.
There was a time in my life when I was visiting a shrink on a weekly basis. I recall telling him about a dream in which a toilet was overflowing and I was trying to take care of it but the water level just kept rising and eventually there was water and feces flowing all over the floor and there was nothing I could do. He told me that this was the result of my efforts to examine the questions that I was talking over with him. I was making an effort to look at the dark stuff that people ordinarily don’t like to think about but that we all know is there and must be dealt with all the same.
That’s what I think has been going on at our Retire Early boards in recent years. We all know that the stuff being put forward by the Greaney Goons is sewage. We all hate it. In ordinary circumstances, we wouldn’t remain long at a party that Greaney Goons were permitted to crash. We would ask the host to take care of the problem, and, if he failed to do so, we would walk. Most of us view our self-respect as being of greater value than whatever enjoyment we get from attending even the swingingest party.
Most of us view our self-respect as being of greater value than whatever enjoyment we get from participating at even the swingingest discussion-board too. So why the heck do we tolerate the Goons? Why have we permitted them to continue their Campaign of Terror against us for over four years now? Why is it that we fail to take action when it is brought to our attention that the community toilet is overflowing?
It’s because of the emotions that the longest and strongest bull market in the history of the United States has caused us to feel in response to discussions of the realities of stock investing. We all know on some level of consciousness that, when prices get out of hand, they must at some point return to reasonable levels. We don’t enjoy contemplating this reality, however. We certainly don’t like looking at the numbers. We don’t want it shoved in our faces just how bad things have gotten, just how irresponsible we have been in bidding up stock prices to such absurd levels in recent years. We don’t want to think about how many people we have hurt by doing this, and we especially don’t want to think about how much we have hurt ourselves.
We need to think about it, though. Broken toilets must be repaired. Broken stock markets must be repaired too. Not thinking about the problem doesn’t solve it. Not thinking about the problem causes the problem to get worse.
We need to get about the business of fixing the toilet. Actually, there is more than one toilet that we need to fix. We need to fix the community toilet. We also need to fix the Big Bad Outside World’s stock-market toilet (or at least make the necessary change in our stock allocations so that the continued overflowing of that toilet doesn’t do us more harm).
We are looking at some dirty and unpleasant-smelling things. Not because we enjoy looking at dirty and unpleasant-smelling things. We are doing this for a bright and good and healthy reason. We are doing it because we want to win financial freedom early in life and because that requires investing effectively for the long term and because that in turn involves dealing with human emotions, which are the driver of changes in the prices paid for our stocks.
Plumbers get their hands dirty from time to time. That’s a fact. But plumbers do work that very much needs to be done. Plumbers are a good people, a kind people, a generous people.
We are a community of plumbers.
So let’s plumb!