A Worthwhile Financial Markets Diagnosis
Sometimes I find the best people to relate with about the markets are the ones I least expect.
In fact, sometimes hearing economists explain markets can make the least amount of sense. I’m amazed how I can find more from a PhD holder in developmental biology, than an economist recommending the solution to our woes may just be building an arsenal to prepare for alien invasion.
On a recommendation from one of my favorite authors, I listened to an audio recording last week of Bruce H. Lipton’s The Wisdom of Your Cells. Lipton is a biologist, instructor, and author known for linking science and spirituality. His audio lecture covers realizations throughout his career about classical medical thought, his own experiences cloning and culturing cells, and how many of our concerns involve our own choices of what to allow into our atmosphere and our perception (right or wrong).
Most think many health matters are out of our control. The feedback we receive from family, our doctors, and the media is that our genes control how long we will live, diseases we may be prone to, and so on. We are victims of heredity.
Lipton found while teaching college courses that the information in text books fit the above mentality. Meanwhile, what he experienced as a researcher lead him down an entirely different path. The cures from the classical approach didn’t seem to work for everyone though they had similar problems. One nugget of wisdom came when a mentor recommended that while diagnosing cell cultures to consider the influence of the environment before rushing to other judgments.
Lipton found that the atmosphere of the culture explained just about all of a reaction from the cells: when a poison was introduced, cells moved away from it; when nourishment was introduced, they moved towards it.
As the sum of millions of cells, we respond similarly to fear (poison) and reward (nourishment). What Lipton would have us know is that unlike the cells he observed, we don’t often realize is much of atmosphere is self-created, or self-limited by our perception; by the news we choose to let into our homes, by the beliefs we accept from family, by the lack of understanding we have about our financial plans.
The conventional model is to diagnose what is wrong with your body, and find something to introduce to fix it. In the investment world it would be to take arisk tolerance questionnaire, and recommend a new mutual fund or other product that fits your new feelings.
Lipton’s method to health issues is to ask: what is happening in your home life, your work life, your personal life, etc. What is going on in your atmosphere orculture. We are not the victims of the classical model, but there are very real items in our personal atmosphere that we do not always realize we have control over that are often the causes of how we (or our body) reacts.
Instead of your atmosphere being created by pundits, economists, and false beliefs, I believe Lipton would suggest attacking market anxiety by having an understanding of how investing fits into your personal financial plan, goals, and knowing the trade-offs in terms of lifestyle of not investing. The treatment would be an understanding of your finances, a discussion with your financial planner, and a change in where you consume your financial news.
But, I’m willing to admit that perhaps the answer also in part is with the space aliens because anyone watching the market reactions as a distant observer would be amazed at the severity. Instead of watching the news or your portfolio value daily, take the bigger picture approach and realize the daily moves are muted over the longer-term.
Lipton’s message is powerful: we’re not victims, least of which to our own limited perception of the current atmosphere. As an investor and consumer we are a part of the market, not a victim of it. It would be good if we realized that every now and again.
The preceding blog was originally published by the Financial Planning Association®(FPA®). To view the original blog please visit the FPA Web site.