The idea behind this post came from Bob Veres whose thoughts and writings appear from time to time in the magazines and journals that I follow regularly. This has been an up-and-down summer and there are lots of thoughts to share.

1. Emotions rule asset prices and any effort to invest rationally is doomed from the start.
2. Global political leaders and voters are interfering in the complicated process of cleaning up our European and US debt mess in a way that harms the fragile new shoots of economic growth.
3. Our best efforts as advisors is to keep our clients from joining the herd, and stop lurching from panic to panic which inevitably sabotages returns by giving in to the emotion of the moment.

Bob Veres concludes that we are being victimized by another kind of economics. The press and the people who promote the conferences to which we are invited want to attract the broadest possible audience. This leads to a kind of race to the bottom. Who can best dumb the news down so that it can be digestible by the person who has trouble spelling (or pronouncing) macroeconomics?

Unfortunately, this affects the quality of our conversations. Our clients are exposed to an echo chamber which reflects the mood of the herd, and how it happens to be spooked at the moment. Our politicians hear from voters whose understanding of the US economic framework is reduced to “debt is bad” and perhaps “maybe we can eliminate government debt by reducing foreign aid.”

Bob also talked about a telephone solicitor whose efforts were to get him to attend a financial conference. It really didn’t matter that he, Bob, would learn any real and useful information, only that he, the solicitor, was focused on getting as many warm bodies to the conference as possible.

He concluded that we are going to sail through a lot of these volatile periods over the next 5 to 10 years and as an advisor to people like me, there has to be a better way to deal with these periods that won’t harm clients and their investment goals. We need to better understand what is going on. And consumers of financial advice deserve to be told more than just which way the wind is blowing today. Our poliical debates require more informed voters.

The deeper and better our conversations, the more likely we are to get out of this difficult economic period undamaged. This blog is my personal effort to try and make a difference. I’d appreciate your feedback and comments to tell me you agree or disagree with my thinking.