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Good-Enough Returns: Financial Advisors' Daily Digest

Jul. 11, 2017 11:33 AM ET4 Comments
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SA For FAs


  • Cullen Roche shares a few lessons he’s learned from the financial crisis.
  • Nicholas P. Cheer shows five ways to beat an index fund.
  • PagnatoKarp, a new contributor, looks at the downside of indexing.

Continuing our discussion on implications of the financial crisis, today Cullen Roche shares three things he’s learned from the financial crisis. The first is to be opened-minded and avoid doctrinaire thinking; a second, related idea is to beware of emotional biases.

Both are good points, but I like his third best, which is that the “perfect is the enemy of the good.” He actually sneaks in a fourth point under No. 3, but there doesn’t seem to be a “four things I’ve learned” genre. Though they’re wrapped together, I will untangle them because both are important. First, he writes as follows:

The financial crisis led to a voracious appetite to better understand our monetary world. And while this learning was good, it could also be destructive. For instance, I found myself watching financial TV every day during the crisis, only to realize over time that none of that was helping me learn. It was mostly just filling my brain with things I didn't need to know and exposing me to emotional short-termism. I turned off the TV 5 years ago, and I've learned infinitely more since. But this is just one example of how trying to learn too much can be destructive.”

Roche is to be commended for coming to this realization and making such a constructive change. But I think he greatly understates the problem. TV is not about learning. TV is about pictures. Thus, TV is about entertainment. Even if the commentators are smart people saying interesting things, the screen is always flashing new pictures, and pictures are more about prompting emotional reactions than knowledge building. So if the aim is to increase learning, then shutting off the TV is imperative.

That said, Roche’s main point (under lesson No. 3) was this:

In portfolio management, the pursuit of perfection

This article was written by

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GIL WEINREICH - Author of "The Mentor," a unique parable for financial advisors and those who aspire to become one. I have worked in the FA arena since 1997, and during that time, the New York State Society of CPAs twice awarded its prestigious Excellence in Financial Journalism award to me for a monthly column I wrote on business ethics. Previously, I reported on international news for Voice of America (where I was awarded a newsroom writing award) and prior to that worked as an editorial assistant at U.S. News and World Report. I live with my wife and children amidst the verdant and vibrant hills and dales of Jerusalem.

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