Do You Stick Your Head in the Sand?

Below is a good article from Carl Richards discussing the importance of consistently confronting the realities surrounding our financial life instead of ignoring them. When it comes to money, ignorance is not bliss.

Scott Smith
C&J Wealth Advisors
Article credits: Behavior Gap Newsletter by Carl Richards | July 31, 2014

Do You Stick Your Head in the Sand?

Not listeningNot all information is created equal. It’s particularly true when it comes to financial decisions. Information about how your neighbor invests, for instance, is of little use to you. While knowing how much debt you currently owe can matter a lot. But there’s a problem. We don’t always want to hear the information we need to know.

Information aversion, or the ostrich effect, can lead people to avoid learning certain information if they suspect it will be bad news. Economist Josh Tasoff and accounting professor Ananda Ganguly conducted a study that tried to assess how information aversion affects health care. If you’re the kind of person who avoids going to the doctor for as long as possible, you probably know what they discovered.

A number of study participants opted to avoid testing for a particular (non-lethal, but unpleasant) disease. When asked why, “the most common explanation was that they felt the results might cause them unnecessary stress or anxiety.”

Now, how many times have you avoided learning more about a particular area in your financial life because you felt the answers could be stressful?

I suspect all of us have done it at least once. From knowing our real debt number to figuring out how much we really need save for retirement, sometimes it’s just easier to stick our heads in the sand. Ignorance is bliss, or at least that’s what we tell ourselves to justify not knowing something that could help us.

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Smart Investors Ignore the News

When describing my job to friends, I tell them that most of my day is spent reading.  To be more specific, it’s deciphering good information from the rest of the headlines that are simply media noise.  Enclosed below is a good blog post from Chuck Jaffe that talks about his observations of the headlines and his advice for investors to avoid knee-jerk reactions to media noise.  With so much information and so many opinions out there today, it’s our goal as an advisor firm to filter out the noise and provide clients with straight talk that conveys facts that are meaningful to our clients.

Scott Smith
C&J Wealth Advisors
Article credit: By Chuck Jaffe | MarketWatch | August 18, 2014

Smart investors ignore the news
You can read the headlines, just don’t trade on them

If the market is making your head swim, you may be able to solve the problem by Flying Colors Slots spins turning off, tuning out and dropping out of the 24-hour news cycle.

That’s an oSmart investors ignore the newsdd suggestion coming from someone who works in the media, but what makes it doubly strange is that it’s prompted in part by the website I trust like no other, MarketWatch.com. Beyond simply being my employer, I trust the site because I know personally the quality people and journalists my fellow staffers are

But, last month, MarketWatch set a site record for the number of unique visitors to its news pages, which set me to wondering what kind of messages we were sending to both new and increasingly active visitors at a time when they were presumably drawn in looking for some measure of market guidance to calm their nerves or keep them on top of the financial news.

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