Perhaps you watched the BAFTAs at the weekend? It was certainly hard to miss Monday morning headlines, which largely featured Leonardo DiCaprio clutching his award for best lead male actor for his role as Hugh Glass in The Revenant.
The double-edge sword of social media is that anyone gets to have a say, which frankly is often unwise. If you follow twitter or any social media, you will probably be aware of the proverbial storm in a teacup following remarks the host Stephen Fry made about Jenny Beavan’s appearance. If you didn’t see it, well, she is a brilliant costume designer and was perhaps the only one that didn’t appear to dress up for the awards, which is generally regarded as a black tie/cocktail dress event. Though some men wear a regular tie rather than a bow tie. Ironic gesture, couldn’t be bothered, making a point, or didn’t read the memo. I have no idea, but as someone that was in London at the same time, one might consider another view that she was appropriately dressed for the weather on 14th February 2016. The truth is I have no idea.
Anyhow, she won a BAFTA for costume design for the film “Mad Max, Fury Road”. Mr Fry made a comment about her attire, which was met with gasps from the audience and a tidal wave of comment on social media. Mr Fry then chose to tackle this head on, saying it was a joke, with a close friend and people should.. well, find other uses for their time…. In fact had this all happened before the film was released, one could have been forgiven for thinking it was a PR stunt (Mad Max, Fury Road).
Et tu Brute?
So why bring this to your attention, what has it to do with financial planning? Nothing and everything. There isn’t a connection, but there is an observable behaviour that took place – that of the herd mentality. It seems that there are a great many people who are very quick to pass judgment without possession of all the facts and very quick to pronounce others as something unpalatable. There was the equivalent of a stampede to get one’s knife in… et tu Brute? The exchange between sides was fairly unsavoury, albeit without a single physical blow.
Investor Behaviour – the herd mentality
This happens with investors too. They panic in a herd and run for the lifeboats, just because someone seems to have yelled “lifeboats?” (or crash). There appears to be little thought of whether the facts are accurate, the context or whether to the lifeboat option is actually the safer approach. If you are RBS and your portfolio is full of rubbish, you might understandably say “sell everything” but if you don’t it makes little sense.
Investor panic is understandable in a world where the media is reporting doom and gloom, red exchange boards and falling stock markets. But remember that the media is there for a variety of reasons, not simply to provide “the truth”. It will never be held accountable for predicting the future other than in a joke about previous blunders.
As I hope you know by now, most investors underperform the market by attempting to time the market – trying to second guess when is the right time to buy and sell. They underperform by around 3%-6% a year. Yet all the time, there are those screaming – do something, sell, buy… whatever the herd is doing. If you don’t believe me check some easily found research at Dalbar.
The Subjectivity of Art
The BAFTAs and any other award ceremony is frankly nice, but just silly. They are highly subjective gongs for a very small number of people, selected by a lightly larger group of people. Yet even within the hallowed walls of such organisations, one wonders if everyone that voted actually saw the films they voted on. Frankly I suspect not. It is the only way I can rationalise some of the winners…. But then its subjective and nobody gets hurt… right?
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Bonfire of the Vanities and Awardsadmin2017-01-06T14:39:19+00:00