Tag: Wendy Cook
Financial writer and friend Wendy Cook posted the following piece on her own blog recently, and granted us permission to share it here.
We like Wendy’s post and applaud the ideas of the late Hans Rosling because his work parallels our own emphasis on evidence-based investing. His bestselling book Factfulness points out that our instincts and biases often make it difficult to perceive the world factually. Just as we point out in our work with you, and as we’ve highlighted in past reviews of Michael Lewis’ book Moneyball, it’s tricky work to get out of our own heads and better understand the world through data and evidence minus emotion and instinct.
*Keep in mind Wendy writes for a special group of advisors.
Facts, Finance, and Feeling Good About Yourself
by Wendy J. Cook
Recently, I finished reading Factfulness by Hans Rosling. I discovered Rosling’s work nearly a decade ago when his YouTube video “200 Countries, 200 Years, 4 Minutes” went viral, at least among us data-dorks.
Making the leap from Rosling’s four-minute video to his full-length book took some time. Unfortunately, it was time Rosling himself did not have, having passed away from pancreatic cancer in February 2017. Reminiscent of the late Gordon Murray’s inspiring collaboration with Dan Goldie on The Investment Answer, Rosling dedicated the last year of his life to completing Factfulness. He collaborated on it with his son and daughter-in-law, who published it in 2018.
Referring to “data as therapy” and “understanding as a source of mental peace,” Rosling urges us to employ “factfulness” to recognize that the world is usually better off than we think. With Bill Gates describing it as “one of the most educational books I’ve ever read,” I figured it was worth checking out.
Factfulness and Finance
How does factfulness work? Without it, we become overwhelmed by all the bad news going on around us. With it, the greater facts remind us that historical conditions have been even worse. In other words, we are making enormous progress, but close up, we can’t see it. Rosling explains:
“Journalists who reported flights that didn’t crash or crops that didn’t fail would quickly lose their jobs. Stories about gradual improvements rarely make the front page even when they occur on a dramatic scale and impact millions of people. … Safe flights are not newsworthy.”
It’s easy to connect these messages with the same ones you likely espouse for yourself and your clients as you help them embrace evidence-based investing.
A Higher Purpose
Beyond that, I took a greater message from the book. If your advice has been incorporating insights gained from behavioral psychology, it’s one you’re already familiar with, but it bears repeating: By losing sight of factfulness, it may often feel as if BIG acts, ENORMOUS effort and MAJOR improvements – the kinds we read about in the paper – are the only changes that matter.
All facts considered, this could not be further from the truth. Ordinary, everyday accomplishments are what Rosling describes as “the secret silent miracle of human progress.” Your and my small, unsung deeds are the streams that feed rivers that run to oceans of accomplishment.
So, whether it’s going that extra mile for your clients or dedicating some time to a community project, let’s each take on one or two good deeds – today, tomorrow, and the day after that. They don’t have to be huge; just make them a habit and, over time, that will do.
Give the Gift of an Amazon Review
Here’s one small possibility you may not have thought of: Give a good financial book a positive Amazon review.
You see, some of my best friends are financial authors. So, I happen to know, one of the best ways you can help them increase their sales and readership is to review their books on Amazon. These days, a strong presence there is electronic gold, like being in the “featured books” section of a brick & mortar store.
Your review need not be novel-length itself. Two minutes, five stars, and a few sentences should do it. Go ahead. Pick some of your recent favorite financial reads, and go to it.
Our friend, Wendy Cook, recently wrote an article called “Why Even I (Especially I) Need an Investment Advisor”. We think it’s an excellent explanation of why one should hire a professional to help meet important financial goals. Please read on for the whole text:
Hire an Adviser or Do It Yourself? If ever there were a promising candidate for a DIY approach, it would be me.
That’s not always been so. When I embarked on my investment journey around 1990, I was just a typical investor about to enjoy a tech-boom-fueled run in the markets. Then, in 1998, I happened to accept a position at Buckingham Asset Management, where I was introduced to a new way to invest. I’d written about healthcare, libraries and pet care products. Why not finance? I knew as much about investing as the next person.
Which is to say, I knew nothing.
In what turned out to be one of the luckiest breaks in my life, I heeded the advice of my new employers and shifted my scattered stocks into a portfolio of Dimensional Fund Advisors funds. I didn’t really know why, but to be a team player, I took a leap of faith.
Then that tech bubble burst and, boy, did I learn fast how lucky I’d been to have placed my blind faith where I did. Not only did I happen to sell at the height of the bubble, but I was relatively protected when it blew up. Plus, I got to do some tax-loss harvesting, so I paid almost no gains on the transformation. Suffice it to say, I’ve never looked back.
Since then, I’ve learned a lot more about the whys and wherefores of my actions. What began as beginner’s luck has matured over the years into the deepest appreciation for the science and wisdom of evidence-based investing. From my personal experience as well as the many tales I’ve been privy to in my day job, I know that, compared to any other strategy … well, there is no comparison.
So these days, I’ve got way more understanding of the science of investing, with way more disciplined decision-making capabilities and way better abilities to spot a financial pig in a poke. I’ve also seen the intricacies of portfolio management first-hand, with sufficient working knowledge to go DIY if I had to – especially with today’s automated robo-advisor services to help with the heavy lifting.
Still, I won’t do that. In fact, the more I learn about investing, the more comfortable I am paying for the advice that I know I still need. Here are a few reasons even a sharpshooter like me should not hit the trails by herself:
Me and My Brain – Knowing about my behavioral biases doesn’t immunize me against them. When the financial you-know-what hits the fan, I value having an evidence-based adviser as my dependable sounding board, to confirm that I’m remaining rational … or to let me know if I’m not.
Me and My Education – Since I first discovered evidence-based investing, that evidence has refused to sit still. If anything, its pace has only quickened as new, seemingly credible possibilities augment existing insights and spur off in intriguing directions. To help separate the substance from the senseless distractions, I collaborate with my adviser (and his advisor community) as I consider what to make of the news. Otherwise, circle back to the first point: My brain is always trying to play expensive tricks on me.
And all this is before we even get to the many second-opinion questions I pepper the guy with, on everything from our estate plans, home mortgage and insurance coverage to whether he happens to know a good criminal lawyer for a friend of mine whose son got in a bit of a tight spot.
Me and My Family – My poor husband. Through vicarious absorption, he’s had to learn way more about investing than he’d probably prefer. But if that proverbial bus were to suddenly call me home (and the way I drive, that’s not such a stretch), I feel so much better knowing that all he has to do on the financial front is to call Phil. I would like my family to miss me for my good company, my good humor, and maybe my good cooking – not for my ability to manage a mean trade sheet.
Me and My Time – Which brings me to my last point. Even if I could do all of the above on my own, my long run as a disciplined evidence-based investor has left me in the fortunate position that I can afford to pay Phil to do it instead. Frankly, I’d rather be writing and leaving the nitty-gritty portfolio management to somebody else. Thanks, Phil!