A loved one passes away. We suffer a financial setback. Our marriage hits the rocks. We are diagnosed with a serious, maybe life-threatening illness. Our children struggle.

All too often, we lament, ‘Why me?’ Or, ‘It’s not fair!’  We look around and it seems like everyone else is doing fine. Why do we have to endure this terrible hardship?

We have to endure this hardship because we are human. Inevitably, we all go through tough times.  Nobody escapes it.

When we tell ourselves it’s not fair and ask why me, we deny our humanity and increase our suffering.

But when we embrace our humanity, we realize tough times are part of life.  We shift our focus from feeling sorry for ourselves to figuring out how we can seek support to help us navigate these difficult times.  We shift from being a victim to taking charge of our lives.

Can you embrace your humanity the next time the going gets tough?

Do you ever feel like you are wandering in the dark?

There is something missing in my life, and I can’t figure out what it is.

My child is struggling, and I don’t know how to help her.

My big project at work is overwhelming.

The sobering truth is there are many times in life where we feel lost and confused. We don’t know what to do; we can’t see the path ahead of us. As we peer into the darkness before us, every step seems treacherous.

We might not be able to see far into the distance, but we often can see a short distance in front of us. Focus on that. Stop asking yourself how to solve the problem; start asking yourself what is the next right step for me to take. Take that one step. Then focus on the next short distance, the next right thing to do.

As you focus on each small step, have faith that you will figure it out. Have faith that you will get to where you need to go. Take a deep breath. Remind yourself of the enormous resources at your disposal, your Signature Talents™ and accrued wisdom, your network, your intelligence, persistence and resilience.

Do you feel like you are wandering in the dark? Can you look to the future with faith and confidence and take that all-important next step?

I knew and you should have known…

That the Seahawks were going to lose.

That the S&P 500 was going to rally double digits in 2014.

Surely, someone knew this was going to happen and profited from it.

We probably all have heard similar statements.  It makes us wonder if anyone is aware of the havoc hindsight bias can play on an investor’s portfolio.

What is hindsight bias?  Wikipedia describes it as the “I-knew-it-all-along” effect.  Psychologically speaking, it is the inclination, after an event has occurred, to see the event as having been predictable – despite the fact that there was little or no objective basis for predicting the outcome.  It’s a common memory distortion that can lead us to find casual connections where none exist and these errors can affect how we interpret not only a past event but future events as well.

Hindsight bias can lead investors to buy high and sell low. The danger of hindsight bias isn’t just that it affects one bad call. The real danger is that believing somebody “should have known” can lead investors to make decisions and design portfolios with too little consideration for their own risk or goals. How?  Overestimating the accuracy of our past forecasts may lead to overconfidence in our future forecasts (“Hey, I was right before!”) and hence to taking excessive risks. Hindsight bias also can affect relationships between investors and their advisors; if an investor believes his or her advisor should have been able to accurately forecast market performance, they could lose confidence in their advisor’s abilities and advice.

Hindsight Bias Can Affect Everyone.  After the fact, events often seem “obvious” and “inevitable.”  Most people forget what they were thinking before the event occurred. For example, a globally diversified portfolio, one that contains both international and U.S. investments, looks silly (or worse) since the U.S. market has outperformed the international markets by 100% over the past six years.  When we feel the first “But this was so obvious!” thoughts creeping in, this is when we should pause and think about not only what did happen but what could have happened.

Still not convinced?  Let’s take a broader look at how U.S. markets performed in comparison to international markets. If you remember, in the 1990’s, the U.S. outperformed international markets essentially throughout the entire decade. By the time the dot.com market became the dot.com bubble, most Americans considered it foolish to invest in overseas companies.  Do you remember what happened next?  The chart shows International markets regained the lead over domestic markets around the bottom of the bear market; beginning in 2002, and they outperformed U.S. markets for six consecutive years – until the subprime crisis (likewise unpredicted) hit in 2008. Do you now feel more or less confident about predicting which one will lead this year?  Hindsight bias can make any tactic employed to defend against potential bear market scenarios in the past look silly when viewed from the perspective of the current U.S. market leader.

Source: Morningstar.

Source: Morningstar.

The future is not as predictable as we might like to believe.  Who predicted that oil would fall 50% from its recent highs?  Or that the Swiss Franc would rise 41% in a single day? When you start to think you could have or should have predicted it, remember, everyone else thinks they can, too. Someone is always wrong, and most of us can’t remember times when we were wrong because it’s part of the memory distortion that comes with hindsight bias.

Invest for an unpredictable future.  We recommend making investment decisions based on what you need an investment to do for you, not based on what you think is going to happen  Acknowledging what we cannot control helps us stay focused on what we can control. Life does not always play out according to even our best-laid plans. Expect the unexpected. Ask yourself what could go wrong and manage for that possibility, rather than focusing exclusively on what you believe will go right. Remember the importance of diversification.  It’s not to increase portfolio returns; rather, diversification is designed to protect you should events not turn out exactly as you would like.

I want to spend more time with my kids who are growing up way too fast. 

I want to learn to play the piano. 

I want a job that I feel good about. 

I want to raft down the Colorado River.   

My wife and I have been struggling in our marriage for years; I want to be in a mutually supportive, loving relationship. 

I want to . . .

Time inexorably marches on.  Tomorrow is promised to nobody.

Live your life. Take chances. Be crazy. Don’t wait.  Because right now is the oldest you have ever been and the youngest you’ll ever be again.

What are you waiting for?

How often do you think about money? Do you worry about losing your money or not having enough for retirement? How often do you look at your investments or calculate your net worth? Do you worry about paying your bills? Do you use money as a measuring stick for knowing if you’re getting ahead or falling behind?

It’s easy to obsess about money. Easy, but not helpful.

As humans, we can focus our attention on only one thing at a time. When we obsess about money, we diminish our ability to live in the present, to connect with the people around us, or simply to have fun.

Our financial situation doesn’t change very much every day. A well-diversified portfolio doesn’t need daily monitoring. Worrying about our bills doesn’t help get them paid. Using money as a measuring stick just distracts us from what really matters in life.

Turning off our mind’s money chatter is not easy, but it is possible if we take some simple steps. Turn off the financial talking heads. Check your portfolio every month, or better yet, every quarter or even annually. If you are a worrier, set aside ten minutes a day to worry about money and banish those worries for the rest of the day. Cultivate a sense of gratitude for your abundant life blessings.

How can you think less about money?

After years of faithful service, my toaster needs replacing.  On Sunday morning, I decided to shop on Amazon for a new one. With just a few key strokes and clicks, I had hundreds to choose from.  I started reading the reviews to understand toaster technology and to figure out which toaster would be right for me.

After 30 minutes, a startling realization hit me like a bolt of lightning.  I was spending my precious time on a Sunday morning reading about toasters.

None of the toasters I was considering cost very much.  They were all in the $20 – $50 price range.  More importantly, all I wanted was a toaster to toast my morning bagel, and all of them could do that just fine.  So I stopped analyzing, bought a toaster, and went back to enjoying Sunday morning with my wife Heidi.

It’s incredibly easy to spend time on things that don’t really matter.  If you are not careful, all of sudden you’ll find yourself deep in thought reading toaster reviews, and forfeiting your favorite time with your family.

We live in a world that offers a gluttony of choice. (Do we really need hundreds of toasters to choose from?)  Sometimes the right choice is to choose quickly, and get back to living your life.

Have you fallen into the 30-minute toaster trap?

I can’t believe I did that. What was I thinking?

The answer was staring me in the face. How could I be so stupid?

Why can’t I lose this weight? I know what I have to do, eat right and exercise. Why am I so lazy and undisciplined?

Sound familiar? Do you often engage in self-attack, beating yourself up for not doing it perfect – err, perfectly?  Do you call yourself names in a vain attempt to whip yourself into shape?

I hate to be the one to break the news to you, but you are human, just like the rest of us. We all make mistakes and we all have our struggles. It is just part of life.

Self-attack is never a winning strategy. Self-shaming is self-defeating. It drains our confidence and leaves us feeling discouraged, often driving us to engage in the exact behaviors we are trying to avoid. When we beat ourselves up for eating that donut, we feel depressed. And all too often, we grab another donut to soothe ourselves.

Catch yourself the next time you consider calling yourself stupid or lazy. Try substituting self-compassion for those degrading self-attacks. Embrace your humanity, and remind yourself that we all struggle, and that life is about progress, not perfection.

Forgive yourself as you would a friend, and move forward with the resolve to do a little better next time.

Next time you struggle, can you try a little self-compassion?

The holiday party season just got over.  Along with the delicious food, wine, and time with friends and family, came conversations about the best investment ideas, the highest returning stocks for the year and the portfolio that returned the most.  I am sure I am not alone in running into these conversations. The other person with the win – it could be your brother-in-law, an old school friend, or even your neighbor – makes investing sound so easy. “Picking the best mutual fund, easy!” “Beating the S&P 500, no problem!” If these conversations leave you with a sick feeling in your stomach that you might be losing in your portfolio and missing out on the next big win, it could be more than holiday bloat weighing you down.

In an effort to help ease that sick feeling and focus on what matters most, here are a few simple ideas that you could consider and repeat as necessary:

1)  Clearly identify your financial goals:  Knowing what your goals are can help you reflect on any portfolio changes you might be considering. Should you buy the next hot investment or keep your hard-earned dollars in a well thought-out portfolio? You are the driver of your life and your portfolio; hence, your life goals, growth and income needs should drive your investments.

2)  Make a plan to reach those goals:  Your long-term needs are what really matters and focusing on a disciplined and systematic process to achieve those goals is what drives success, not investing in today’s winners or paying attention to random short-term market noise. Having a plan and a process to get to your goals can help you hone in on your appropriate risk level – the risk you should take versus the one you are about to take chasing a “sure-fire” investment idea.

3)  Hold investments that fit your goals and plan:  Investment decisions of buying and selling from your portfolio are best made in context of your overall financial goals. When you make decisions based on facts about what you are trying to achieve, you should be better able to keep your emotions in check and stick to your convictions even when others are engaged in panicked selling or in greedy buying. There is no guarantee that any investment will triple or will not go to zero. However, a portfolio well designed with long-term goals in mind and a process developed to get you there can help you reach your goals. Being caught in the trap of looking for the best idea or chasing the winners can lead you to costly mistakes with your hard-earned money.

Source: Carl Richards, Behavior Gap

Source: Carl Richards, Behavior Gap

Remember it is your plan and NOT your best pick that will lead to long-term investment success. Your investment behavior matters more than luck of racking up a few conversation-worthy wins.  So as we embark upon a New Year, resolve to make your investment behavior count!

Sometimes, it is hard to help our family. We notice our parents or siblings struggling financially. We offer assistance. They look at us, acknowledge our generosity, and then politely say no.


Here’s what they might be thinking.

You might need the money. Most of us don’t discuss our finances with family members. Your family member may not know how much money you have, or how this gift will impact you. They might fear today’s gift threatens your future lifestyle.

If you are confident you won’t miss the money, let them know.

I don’t want to be judged. Your family member might fear you will judge them harshly if their future spending decisions don’t align with your values. A gift with expectations about future spending is not a gift. It is a deal. I will do this for you, and you will do this.

Tell them you have no hidden expectations. (Unless it is a deal, and then be clear about your expectations.)

I don’t understand why you offered.  Do you have more than enough money and struggle with what to do with it all? Helping someone we love often leaves us feeling satisfied, even joyful. The truth is as you are helping them, they are helping you.

Tell them accepting the gift will add joy to your life.

The opportunity is right before your eyes.

Every day, the world offers each of us multiple chances to make a positive difference in the lives of those around us. We can compliment a work colleague for a job well done. We can check in on a friend who has been struggling. We can make a small charitable donation. We can leave our server a little larger tip.

It doesn’t cost much to make a difference. Just a little investment of time and money, and the payoff is huge. It feels great to make a positive difference.

So, why don’t we do it more often? Because we are so busy running from place to place, so busy doing our to do’s, that we simply don’t notice the opportunity to connect, the chance to help.

Slow down. Take a breath. Pause and notice the world around you. Every day, look for the chance to make that positive difference. When you notice it, seize the opportunity. Add a little happiness to your life.

What can you do to notice the opportunity?


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