Mark D. Goldstein, CFP®
Certified Financial Planner
President
SAFE-Money Alliance

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Mark@SafeMoneyAlliance.net
www.SafeMoneyAlliance.net

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At the Berkshire Hathaway shareholders' meeting a few years ago, Warren Buffett told the audience, "If you are in the investment business and have an I.Q. of 150, sell 30 points to someone else. What you need instead is an emotional stability and inner peace about your decisions."

Wow, how right he is! I know, because over the last 25 years, I’ve worked with hundreds of high-net-worth investors and the vast majority of these folks were pretty darn smart. After all, the affluent are usually either professionals (like doctors or lawyers) or business owners… and you don't find a lot of dummies in those categories.

And yet, many screwed up badly as investors.

Why? Usually it was because they didn't have the calmness, intestinal fortitude… or what Buffett calls "emotional stability"… to stick with an investment discipline when the financial markets got rough and the predictions got scary.

Ironically, the very same people who regretted how they panicked after the market crash of 1987, bailed out after every sell-off in the years that followed, including 2000-2002 and the most recent one in 2007-2009 (Oct. 2018?). Each time their emotional response… fear of loss… trumped logical decision-making.


These same folks were confident that they would use a future downturn as a buying opportunity. But when the market actually went on sale, less than one in 10 had the guts to step up to buy the bargains. And, of course, later, when the market was much higher and the danger had passed, they felt comfortable enough to put their money to "work" again.

And so it goes.

Let’s face it, friends. Most of us are hardwired to react emotionally, but that’s not generally helpful in the financial markets. Or, as investment legend Peter Lynch used to say, "If you're going to panic, do it early."

Or, better yet, why not play it safe (and smart!) to begin with?

Mark