The Madness of Crowds

The Madness of Crowds

May 01, 2023

As a long-term investor, your patience continues to be tested as we head for a bumpy landing after a very bumpy ride in 2022.

No one knows what will happen; the trajectory of inflation, a recession, and we might worry about our cash in the bank? 

The dry observation that the Fed always breaks something comes to mind as we see a few vulnerable banks succumbing to fallout tied to rapidly rising interest rates.

There are two kinds of forecasters: those who don’t know, and those who don’t know they don’t know.”- John Kenneth Galbraith

A part of membership in a diverse society is being vulnerable to the madness of crowds. 

Those with cooler heads not inclined to panic could still be impacted by the actions of the group, those prone to shoot first, ask questions later.  There is the very unpleasant feeling that we could be carried over a cliff, even if it is not by our own two legs.

The higher probability is that long-term, goal-focused investors will have a good experience over the working years and 2-3 decades in retirement. 

We also know that there is some probability that over any short time period, experiences can be so bad as to cause some to lose faith entirely.

Those folks will most likely fail in capturing the long-term returns of a successful investment strategy, and increase their risk of outliving their retirement assets.  That is the real risk that all retirement planning seeks to manage.

The madness of crowds can tempt us to join in; the fear of being the dummy left holding the bag is just too much sometimes.  It has been my experience that the opposite is true- keep a cool a head, adjust your perspective, and resolve never to send your retirement security off a cliff. 

Those individuals may not have anyone to guide them and caution them about the madness of crowds. 

Just a reminder that a sound investment strategy does not include buying and selling on the day’s headlines.  That is a recipe for investment failure, not to mention considerable stress.

Please reach out any time!

 Content in this material is for general information only and not intended to provide specific

advice or

recommendations for any individual. All performance referenced is historical and is no

guarantee of future results.

Securities and Retirement Plan Consulting Program services offered through LPL Financial, a