The Behavior of Change
Pulling the trigger is the hardest thing we do
I’ve been talking to two family members for over a year about making investments in the stock market. In that time the market has returned over 20%. But neither one of them have benefited from the market’s performance, because neither one of them have pulled the trigger and invested.
Each of them has their reasons and excuses. One of them was waiting for the presidential administration to change. He had no faith in the outgoing administration, and is all in on the new one. The other one wanted something where he could make a HUGE return. The 8% average return the market yields wasn’t enough. So neither one of them has gotten involved, and neither one of them has grown their money as a result.
I should say, to be fair, that they each have their money invested, its just that their in products that they either don’t want to be in, or that aren’t getting them the returns they want. Which is the reason they’ve been asking my opinion on the market.
I think there are a number of reasons why we hesitate to pull the trigger on something we intuitively want. I think part of the hesitation is the illusion or distraction created by having too many “choices” (if you listen to Wendell Berry he says its the illusion of choice that is our biggest hindrance in life). Why should I invest there when I could invest here, or in that new thing everyone is talking about? What’s that thing everyone is getting rich off of? I think part of it is fear of the unknown. Of doing something you’ve never done before. Something you have little experience with. What if the market goes down? What will I do? And I think part of it is FOMO (fear of missing out). FOMO of bigger returns, better investments, doing something else with my money!
Whatever the reason the result is always the same. Inaction caused by indecision. Inaction that causes missing out on material gains, and mental distress left by the weight of your indecision.
Two years ago when Jen (my fiancé) and I were leaving Los Angeles I pulled a lot of money out of the market. We didn’t know where we would end up living, or what we would do, and there was the potential of buying a house when we did land somewhere. And for all of those reasons I wanted to have a lot of cash on hand. I didn’t want to be in a position where I was selling stock during a market sell off in order to pay our bills or to buy a house. I wanted to take my gains while they were there. I had played the waiting game before, and lost.
I also was very focused, and still am, on consolidating my portfolio. Trying to get the number of positions I held from 20 down to 10 or less. So, after going back and forth, reviewing my portfolio non-stop, I ultimately pulled the trigger and sold off a handful of stocks. I got my cash, and consolidated my portfolio. Progress on two fronts.
Two of the stocks I sold were Netflix and Uber. Both stocks had been on a bumpy ride up until that point. Hitting all time highs followed by huge sell offs. They were too volatile, and their volatility was causing me undo stress. I could no longer look at them and wish them to return to their highs. It was more important to dump them, free my mind, and get the cash. So, that’s what I did.
When I sold Netflix it was trading at $365. It now trades close to $1,000. When I sold Uber it was trading in the $40s. It recently hit an all time high of $87.
From a pure dollar perspective this was a terribly bad move, but the problem with assessing it that was is that it gives no value to the mental aspect of it. That yes, in hind-sight, I could’ve kept both, only sold a handful of shares. But had I done that I would’ve still been putting energy into watching them pop and then retreat. Trying to will them to go up, and stay there. It also would’ve been two more stocks in my portfolio, distracting me from my goal of consolidating. Two more stocks to watch, spreading my attention thin. And while I can’t quantify the value of giving myself the mental room to breath, in my experience it’s benefits far outweighs any dollar amount.
Because I believe that when you get stuck at a decision point, and you let it linger for too long, it starts to consume you, and it prevents you from making progress everywhere else in your life. I belie that when you have a desire to do something, or a need to do something, that’s your intuition calling to you. That’s your gut telling you what to do, and if you ignore it, it has ripple effects throughout the rest of your life. When this happens the call of your intuition starts to get drowned out, and quieter, and dull, until you can longer hear it or recognize it. And the more you ignore it, the worse it gets, until you’re paralyzed with indecision, and it starts to feel like nothing can go your way. And I think that following our intuition, that internal calling we all have, is what leads us on our path to the life we were meant to live.
Now the interesting and amazing part is that at any time you can get that voice back. You can reignite that calling and get back on your path by finally pulling the trigger. Releasing yourself and your mind from that roadblock, and allowing that voice back in to help determine what it is you need to do next.