A bit earlier today, my daughter and I were at a local mall where they offered free horse drawn carriage rides. As you can imagine by the word “free,” there was a long line so I had plenty of time to ponder things. As I was doing so, I started thinking about the two horses being an unmatched pair, but yet they were working together. This made me think about investing, because, after all, I think about that topic a lot!
The brown horse appears slow and steady – the rational side of the investor. Nothing all that exotic there. The white horse, however, looked more exciting. She was the one wearing the sleigh bells and was the most visible. She represented the emotional side of investing – the part where the investor wants excitement (but only the good kind), and great investment success stories to tell their friends.
The kicker here is that both sides have to be moving in the same direction for the carriage to move. If the rational and emotional sides of our investor selves do not work together, the carriage will go nowhere, or, even worse, could topple over.
I am hopeful the markets will reverse themselves soon and regain lost ground, and also reach new higher ground. In the meantime, for the most successful investment outcome, we need to keep our Horses of Two Colors moving in the same direction and not let fear take control. Most importantly, when we work on your financial plans, we assume that there will be times like these because market downturns are a normal function of the stock markets, although we all wish that they weren’t. We have not yet had a financial plan that changed in its success due to short term market fluctuations.
I wish you Happy Holidays, a Merry Christmas, and a Happy New Year!