Don't Confuse Me With the Facts
One of my good friends, and an absolutely brilliant person, likes to say, laughingly, "Don't confuse me with the facts! I'm having a good feeling right now and I want to enjoy it!"
When we look at art, perhaps a painting or a sculpture, we look with different eyes than we use when looking at, say, a computer screen. We think about the colors, and the shapes, and perhaps we think about the way we feel. If you like looking at artwork, you likely enjoy the way that it makes you feel. I know I often struggle to describe why I like something more than another. The conversations I have about some piece of art might actually be some of the shortest I ever have because I don't feel like I have the vocabulary, knowledge, experience, or qualifications, or whatever it takes that would help me not "feel stupid" when discussing the finer points of art.
Don't confuse me with the facts, I might say, to a docent or curator or my soon-to-graduate Art Major daughter. I don't know why I like (love, dislike) that painting, I just do (or don't). You might as well be speaking Latin.
What makes us think that we think differently when we look at our investments? The financial news we hear might as well have been written in Latin.
We hear that the market is making all-time highs, and we have feelings, both good and bad. We hear that oil prices are down, that unemployment is low (or is it high?), and that the rest of the world is lagging behind the U.S. (Or is China taking over the world, I forgot?). All this information gives us feelings, good and bad, and we feel the feelings first. Then we face the facts and, whether you're the owner of the investments or a financial planner, your feelings form your opinions of the facts.
The difference between art and investments is that we have to make decisions based on the facts or we are not rewarded. We are not rewarded for picking a feel-good investment that delivers no financial remuneration.
We fool ourselves when we forget that feelings drive the facts that we're willing to consider. More on this next week!