By: Frank Armstrong, CFP, AIF
The fog of war. Back in my Air Force days in Vietnam, whenever the aircrews questioned a particularly inane operation, the Brass always accused us of not seeing the big picture. Later at Eastern Airlines, we used to joke that Col. Frank Borman, our astronaut-turned-airline CEO, had seen the big picture but had hidden it from us on the dark side of the moon.
As any former GI knows, a little black humor can keep you from going nuts in the face of seemingly chaotic conditions. But, our hope that there might be a big picture was real. We all knew that action without strategy was pointless. When the fog of war descended on us, we all hoped that somewhere was a leader with a plan that would work. In my heart I still doubt that either side had a big picture. If so, there must have been a powerful conspiracy to keep it from being shared with the troops.
As investors we suffer from our own fog of war. It’s easy to get so bogged down in the details of our everyday lives that we lose sight of the big picture. Most of us operate in a state of chronic acute information overload. We are steadily bombarded with a stream of useless trivia, most of which seems to require an instant response of some kind. This type of atmosphere poses twin threats: Either we descend into a mindless knee-jerk action-reaction mode, or we are overwhelmed and just give up. The outlook under either case is not favorable.
The anecdote is for investors to operate under a coherent strategy. With a clear vision, decision making is simplified, and the chances of a successful outcome are multiplied. Investing, like war, requires decision making under conditions of uncertainty. But, uncertainty is not chaos. Investors can develop superior strategies that will extend their control over the outcome, and give them the highest probability of success.
In a recent broadside directed at both investors and the investment industry, John Bogle, Chairman of the Vanguard Funds, questioned “To What Avail? Computer Technology and Mutual Funds?” (http://www.vanguard.com/educ/lib/bogle/comptech.html)
While I recommend that each of you read it for yourself, one central theme is that fancy gadgets spewing forth an avalanche of data and information is no substitute for the wisdom to use it properly.
I concur. My mission here at MFI will be to help you to develop your own big picture of the investment battle. We have some powerful allies.
Financial economics has learned more in the last twenty years about how markets really work than we learned in the previous four hundred. Large institutions routinely use this strategic intelligence in their own operations. But, there is nothing preventing individuals from adopting these same time-tested winning ways.
My online book, Investment Strategies for the 21st Century, gives you a complete easily
executable strategy and the rationale behind it. Meanwhile, this companion column will explore new issues, research, products and opportunities. Together I’ll be showing you how to use available tools to level the battlefield, and tilt the odds for your investment success.
Unlike war, the ultimate negative sum game, the investment game doesn’t require a loser. We can all win. In fact, we all should be confident that we can develop and execute winning strategies and tactics. We can plan for our own financial security, a prosperous retirement, and the education of our children with assurance that our dreams will come true. In fact, I’m going to argue that the odds are so tilted in our favor that with a appropriate strategy that operates in accordance with known facts, there is almost no excuse for screwing it up.
You can win. You don’t have to fight alone, and this is one campaign you don’t have to wage without a big picture.
The Fog of War
By: Frank Armstrong, CFP, AIF