The recent end time prophecy, which centered around the prediction that the world would come to an end on May 21, 2011, received massive publicity and many lives were adversely affected. As we know, the prophecy didn’t come to pass. But there is something we can learn about financial planning and investment strategies based on the events that took place. Let’s look at it more closely:
The Parallels of May 21, 2011 and the Investment World
First, there was a voice, claiming to be an authority, who utilized advertising and marketing through billboards, literature, radio time, the internet, and word-of-mouth to spread the message that the world would end. There were three types of people who responded to this message.
- First, there were those who followed the predictions without questioning. Many of them sold their possessions, quit their jobs and helped spread the same end time message without questioning.
- Second, there were those who thought about the prophecy, considered whether it was true or not, maybe conducted some side research of their own, and made a quality decision on the matter.
- Third, there were those who simply ignored all of it and went on with their everyday lives.
Now, let’s parallel this information with investment strategies.
In the investment world, there are voices, claiming to be authorities, who make numerous and highly advertised predictions. Each one claims to be an authority and each one claims to have ‘the answer’ or inside information regarding the next economic swing. Just conducting a Google search on investment strategies can pull you in a hundred different directions, each one promising to be crisis-proof. There are three kinds of people who respond to this as well.
- First, there are those who follow the hype blindly. These individuals can be private investors or even stock brokers and financial advisors who rely on others ‘fail-proof’ predictions to direct their investment strategies as well as the advice they give to others.
- Second, there are those who take other’s predictions and investment strategies into consideration, but they balance what they hear with their own research, knowing that no one has a corner on predicting the economy or world events.
- Third, there are those who go through their lives without ever planning for retirement or making any type of investments to secure their financial future.
The Bottom Line:
So, what’s the bottom line here? The same principle that applies to the pastor who predicted the end of the world can be applied to the investment strategists and financial planners.
Looking at the parallels above, you don’t want to be the first person, the one who blindly believes and acts on the predictions of others, whether they are doomsday preachers or financial planners who claim to have cracked the code. You also don’t want to be in the third group of individuals, those who just ignore the possibilities of investing because they don’t understand it. Planning for your retirement is a must. Ignoring it won’t make it go away.
So, the best strategy is that of the second individual. He’s the one who is open to look at possibilities and information, but is prudent in his investment strategies. He isn’t tossed around by every new investment idea and he realizes that much of what he hears, especially from advertisements, is purely hype.
Common sense tells him that there is no way to predict a sure thing. There are too many variables involved. That’s why the best strategies involve diversifying your investments and having the proper balance of low risk and minimal risk investments…because no one knows what the future holds.