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Moderation In All Things, Including Investing: Financial Advisors' Daily Digest

Mar. 06, 2018 12:25 PM ET6 Comments
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SA For FAs


  • Jim Sloan grapples with "the hardest question" he has grappled with in his life as an investor.
  • John Cochrane distills the major reasons why tariffs are bad.
  • ETFguide: 3 strategies for managing higher volatility.

In what is an investment tour-de-force, a must read, required reading and every other cliché I can think of, Jim Sloan's article "The Hardest Question" is one that you should not fail to grapple with. The fact that I have an easy answer to his hardest question should not dissuade you from doing so. Here's his question:

Which is the model of the world with which we should align our lives? Is the normal thing a pleasant advance of freedom and prosperity punctuated here and there with some bad stuff, or is the normal thing much darker - a series of crises to which pleasant times provide temporary relief?"

Sloan compellingly illustrates his struggle with this dilemma, describing both the march of progress Americans consider their birthright, a viewpoint for which he summons Warren Buffett as spokesman, and the darker side which he depicts through a friend he calls Meyer, who fled the prosperous lifestyle he enjoyed in Vienna, while the rest of his family waited for things to "blow over." Tragically, the only thing blowing was their ashes over the crematoria to which every one of them was dispatched.

I give Sloan tremendous credit for asking this question. I don't think it comes naturally to Americans, whose blessed history has known mainly peace and prosperity - may this trend ever continue. The question is even more remarkable for someone who practiced as a financial advisor, as it is almost an industry requirement to give voice to the idea that stocks return between 6.5% and 7% after inflation for the past 200 years.

That is enormously impressive, and its impact is imprinted on everyone living in a comfortable home in a leafy, green suburb or those whose city vibe includes the beat of American commerce in full motion. But as regular readers may

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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Comments (6)

Optimism and pessimism are merely emotional reactions to cold, hard reality. Emotional rather than rational reactions to changes are generally seen as the wrong way to go. The only way to go is to face reality head on and keep your head.

The other part of the article that I found interesting was the shift from large scale changes in the the world (be that financial or otherwise) to the changes that apply to an individual. This is always the issue, large populations can, to a degree, be modeled, individual circumstances not so much.

Yes, very well written (with an eye to the poetic). As someone long ago wrote, and I paraphrase, $heet happens.
ttraver profile picture
What a delightful tale and so beautifully written. Seriously, I will look it up again much later to seek how to improve my ability to allocate and properly deal with life’s issues and challenges.

Admittedly I am in a fog. But so far I have decided not to move to Vienna.
I might visit, but thanks for pointing out the option. I checked my family tree and found out there is no problem. Most never had any wealth to lose, so that shouldn’t be any problem. Low volitility consistently middle class. No poverty YET, but I am
working on avoiding that.
Keep up the great work and eventually I will understand that risk is always there.
I really enjoyed your article. You have a gift.
SA For FAs profile picture
As it seems you are receptive to the message, I am sure it will sink in. :-) Thanks so much for the kind words.
Seen_It_Before profile picture
Gil - You have a writer's knack for integrating concepts and actions with historical reminders that elucidate how a person's destiny is created and should not be presumed regardless of one's station in life. Of all the characteristics we have, adaptability, as you state, "is a critical survival skill for investing and life in general."

I think adaptability and optimism always coexist and reside at the heart of a quality life and successful investors.
SA For FAs profile picture
I will keep on trying, with thanks for your encouraging words.
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