money health weekly


Don't Just Do Something, Stand There


"Financial decision-making is not necessarily about money."

-Daniel Kahneman


It's 5 am, it's still dark, and the snow is fresh. It snowed about an inch last night. As much as I want to stay in bed and keep warm, our dog, Bingo, and I are out on our morning walk.

As we walk down the trail that's next to our house, I notice other dog prints in the snow and think to myself, "Wow, it's so early, but I'm not the first one walking this morning." Bingo likes smelling footprints in the snow. As she smells these dog prints, her head immediately pops up and looks around. "That's unusual," I think to myself as we continue our walk.

Our regular morning walk is an out and back route on the trail. About 100 yards before our turn around point, I stopped dead in my tracks as I hear the loudest coyote I've ever heard coming from right in front of me. When I saw those paw prints a half-mile back, it didn't occur to me that there were no human footsteps next to them.

One coyote isn't so bad, I think to myself. But then I hear another one yipping on my right side. Then another. Then another. Four or five coyotes are howling all around me. We immediately turn around and head home at a pretty quick pace.


Let me tell you a story about a guy I'll call "Paul." In 2008 while stock markets were falling and the media was predicting an apocalypse, Paul watched as his retirement account balances dropped. Paul didn't have all of his money in stocks; he had about half of it in stocks. That means if stocks fall 40%, Paul's balances drop about 20% (depending on what his bonds did at the time). 20% isn't as scary as 40%, but that didn't matter. Paul feared losing more money and sold everything and kept his money in cash.

Stocks have almost tripled since he sold them and he missed out on all of the growth.


Let me tell you a story about a guy I'll call "Ryan." Ryan is in his early 30s and has built up a pretty good net worth for himself, especially given his age. A good portion of his assets are in investments, split between retirement accounts and taxable accounts. In 2016, citizens in the United States elected a politician whom Ryan thought is very scary. He assumed that since the scary politician was now an elected official the stock markets were going to crash. Like Paul, he sold everything and kept his money in cash. He feared his net worth getting cut in half or more.

Stocks have been up since Ryan sold his investments and he has not purchased stocks since.