Trust or Control? - J.E. Wilson Advisors

Trust or Control?

One of the characteristics we sometimes notice in new clients is inordinate worry or fear. As clients begin to accept advice and trust us, however, much of this worry disappears. Worry is ultimately a control issue…you want to control things that you can’t really control. In this context, the opposite of worry is trust. When you trust, you place confidence in something or someone.

From an investing perspective, you can’t control stock or bond prices but you can control how you react to changing market conditions. In much the same way, you can’t control inflation, taxes or world events. French philosopher Blaise Pascal maintained that we are controlled by “diversions”, unnecessary preoccupations that we consciously cultivate often to avoid thinking about what is truly important.

Markets or Magicians?

As we move into a new calendar year, the media are bombarding us with predictions for the year ahead. You want to know, you want to control but alas you cannot. Will this be a good year or a bad year?; Which stocks will rise?; Which stocks will fall?; Will inflation pick up?; Will interest rates rise? No one knows, not even the legions of economists and analysts who pitch their prognostications.

An article titled “The Skeptic’s Guide to Mutual Fund Strategies for investors who no longer believe that anyone — including financial journalists — can really predict which mutual funds will beat the market” appeared in Fortune in March,1999. The writer, Bethany McLean (who later was among first to discover the Enron scandal), says in the article” That’s why building a portfolio around index funds isn’t really settling for average (or a little better). It’s just refusing to believe in magic.”

In the ensuing 15 years since those words first appeared, more investors have indeed embraced the evidence based approach to investing and placed their trust in the market instead of “the magicians”. So, what’s your financial resolution for 2015? Ready for a real conversation?

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