“But all the kids are doing it!” I’d argue as a child when I wanted to do something. Predictably, the parental response was, “If all the kids jumped off the Empire State Building, would you jump, too?”
Parents: 1, Kids: 0. Down in flaming defeat.
Flash forward to adulthood, and our desire for being part of the crowd hasn’t abandoned our psyche, especially when it comes to making financial decisions.
Regardless of the crush of popular items out there, we generally move in lockstep. We want to buy the hot stock, the popular hedge fund, the cryptocurrency, rental real estate—or wherever the herd is heading. We watch cable news, buy subscriptions to newsletters that promise success. It’s ingrained in our brains to follow the group in hopes for success. Standing alone and apart is not cool—rather it’s lonely and requires a level of courage and self-knowledge; two characteristics that go and hand in hand.
Socrates said, “Know thyself” hailing anyone to stop and understand three important things:
In other words, “because” just doesn’t cut it. “Because everyone’s doing it” is irrelevant and unwise. But let’s face it—we live in a society where FOMO is prevalent, where we typically lack a deep understanding of topics beyond our specialty or our interests (except where we’ve devoted time and effort to learn and master).
Here are some common beliefs I have heard:
These examples come from the mouths of intelligent and successful people who firmly believe their statements are true. The reality is, they are shrieking statements of either magical thinking, misinformation, or a mental dam that for some reason has inserted itself into their belief system. In any event, they are great examples of the antithesis of “know thyself.”
In order to move closer to Socrates’ exhortation, begin by examining the data, as follows:
There are so many decisions to make in navigating your financial life—and many are not qualified to make the mandatory decisions involved in financial planning. Trying to make all the right choices for yourself and your family is onerous at best. There are many DIYer’s who believe they are best equipped to make the right choices. Becoming sufficiently knowledgeable in all areas of financial matters requires ample time and education. While some may have this time and education, very few have the objectivity necessary to consistently make the right decisions.
There are many who work with stockbrokers and insurance salespeople who believe that their recommendations are made without prejudice or self-interest. Sadly, too few question the motivations of those who earn their living from the products you purchase. Somehow, most consumers believe they are suitably knowledgeable and objective.
Rather than look inside to lay bare the lack of experience and knowledge, following the crowd is easier and more comfortable. Remember, there is no shame in not having the knowledge or experience—if it’s not your occupation or something in which you’ve studied or been trained, why would you be an expert? [Hint: if you didn’t go to medical school but you look at WebMD, you’re not a doctor!]
The challenge is to carve a path to your success by knowing what you know and what you don’t know; without blame or shame. Align yourself with experts who will help you navigate the many decisions in an objective manner. Do not align yourself with those who profit by selling you a product. Continue to explore the “why” of your decisions and what exactly impacts your thinking.
Socrates had it right in that real self-knowledge was bedrock to living authentically and with meaning.