VIDEO: Behavioral Finance – The Virtue of Strategic Ignorance

Behavioral Finance Video by Jay Mooreland, MS, CFP®
THE VIRTUE OF STRATEGIC IGNORANCE

Strategic ignorance is a positive quality. It is choosing to ignore information that is detrimental to our well- being, and this sometimes includes market information

For example, let’s say at the end of September 2021 you hibernated, or put your head in the sand. You chose to not pay attention to the markets and financial news. And now let’s say you woke up last month and looked at your account for the first time. Do you know what you would have found?

You would have found that the market (S&P 500 Index) was at the same level last month as it was in September of 2021.  It was flat! This may lead you to believe nothing of interest happened in the past year.

But, of course, we know that the markets were volatile. By not paying attention, you would have missed the market increase 11%, then drop 24% and subsequently rise 17%. You would have missed a lot of market fluctuations.

When the markets are going up, it can be a lot of fun to look at accounts and see how much money we are making. But when the markets go down, they often create anxiety, uncertainty, and fear. And many investors may be influenced to sell at the wrong time.

A better investment strategy is to choose to not look during especially difficult times.  The market will do what it does but choosing to not look can provide you with peace of mind and clarity – despite constant sensationalized news and market fluctuations.

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