My family had a semi-heated discussion the other day. I proposed the reality that Bovril is no longer an animal extract. “But it’s made of beef!” was the united, admonishing, almost-hostile retort from direct bloodline and in-laws alike. It took a quick and convenient check of the back of the jar. Yup, Bovril is no longer the beef extract of our childhood. Somewhere along the line it did a stunning about turn and became vegan. The word vegan is actually on the jar. In the fine print.
The point is, nobody was aware and nobody could believe it.
Let’s take another scenario. Imagine you’re watching CNBC and instead of talking stocks, they are talking golf. You gotta play golf. Golf makes you money, Tiger Woods is/was very rich playing golf. Here are the top ranking golf players, let’s analyse their every action because you never know where the money will come from. Now go out and do golf.
Okay so back to reality. You’re watching CNBC or listening to some business radio station or reading a financial daily. They are talking stocks. You gotta do stocks. Stocks make you money. Warren Buffett is very rich doing investments. Here are the top ranking analysts and fund managers, let’s analyse what they’re doing because you never know. Now go out and do investing.
Investism is the myth that you got to do investing in order to survive. It goes along the lines of “learn investing, it’s good for you, then go do stocks/bonds/gold/FX”. The financial media does it. Our great respected institutions like banks and even Bursa want you to play stocks. Learning about stocks is the gateway to happiness. Cramer is cool and glamorous. (Hah! Little do we know). Unit trust agents and financial advisors encourage it. But nobody really knows why doing investing is good.
Learning and doing investing or golfing is all fine and good except for a little flaw. We are so bad at it. We sell when the market is down and we double down when the market is up. We are irrational. This has resulted in the average American retail investor achieving only 5.2% annual returns compared to the S&P500’s almost 10% over 20 years. Whether or not you can beat the market is the true test of whether you should convert to investism. Performance so bad can’t be the stuff of survival.
Because it’s also not our full-time jobs, we make many behavioral mistakes along the way. Forget even about the highly problematic cognitive biases. We can’t even get over our own laziness. We are losing out if we don’t do investments at fixed regular intervals. The red tape in dealing with corporate exercises like rights issues, shareholders voting etc are huge money-losing psychological barriers. Dealing with unfair pricing of odd lots on the stock exchange is another way small investors get stuffed.
It is unfortunately a reality that nobody believes that investism is a problem. Investism, of course isn’t the only problem around. There’s CEOism (the believe that everyone should try to achieve boss-status), leadearitis (empty career leaders who don’t really know how to lead as exemplified recently in Davos) etc. There is of course also my recent favourite, propertyism, the belief that you have to own a property to avoid doom. This has caught the attention of government circles who are making major policies out of property ownership. I’m looking forward to the day when we would make policy about owning commodities and supporting palm oil. Hang on…