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Author: junkman02 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35387  
Subject: Fearing What You Don’t Understand Date: 7/27/2009 3:33 PM
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Fearing What You Don’t Understand

Long-distance hiking might seem unrelated to fixed-income investing. But the two have a lot in common, as can be seen in the following snippet of posts.

Guy writes: I've decided that I'm going to hike the PCT starting next Spring. I've begun all the planning that goes into that. I've told everyone that I needed to, and figured out how I'm going to accomplish it without sinking myself financially. Now, I've got a group of close family/friends trying to convince me not to do this.

My first instinct is to command them to relent, and try and be supportive, and if they can't do that at least shut up, but I'm curious how others have dealt with this kind of thing. I have a feeling that I'm not the only one to have dealt with this.


The Weasel (a trail name) perceptively replies: Much of the reason is that you're doing something that most people don't, and can't, fully understand, and not only that, they think (largely incorrectly) that is wildly dangerous, with all kinds of horror stories. So you're becoming "different" from them by wanting to do this, and that is somewhat threatening to them.

You can do some educational things with them to help them understand better that it is not wildly remote, that you have access to help, and that you are preparing for the risks in a prudent manner. Perhaps they can assist you in some ways, and perhaps if you show them maps and pictures of others doing it they will understand better. Good luck...the PCT is a wonderful place!


Blue Jay (a trail name) follows up: Slaves rarely like other slaves escaping, especially when there is clearly a hole in the fence and they realize only their own actions are holding them back. People do like believing outside factors are holding them back, as that way they can complain and then do nothing.

Fixed-income investing can be done in a lot of ways. Regrettably, due to the putative “safety” of bonds, the asset-class attracts the most-fearful and the least-capable portion of the investing-population, those least able to understand the true nature of investment risk and least able to manage it.

It has never been my intent to encourage anyone do what I do in the fixed-income world, which is to pursue the gains that can be achieved using a classic, value approach to bond investing. But I will argue that such an approach should be considered, given the well-documented failure of supposedly, “less risky” approaches than certain people in this forum so ignorantly tout.

Who’s right? Who’s wrong? Does it even matter, as long as one’s own investment goals are met in ways that one has discovered to be comfortable and effective?

I’m not a long-distance hiker, nor would I be even if I could slack-pack the trail. But I do like to learn what I can from the experiences of others. No matter the context of those experiences, much of the psychological dynamics of one situation carries over into others. Those who can manage their fears in the woods and on the trail (or on the water if one is a rafter, or on rock if one is a climber) are likely those who can manage their fears in the investing world. They become the successful, long-distance investors, those can invest across the yield-curve and up and down the credit-spectrum, instead of sitting on the sidelines, trying to talk others (and themselves) out of accepting reasonable risks in returns for reasonable rewards.

The Greek fabulist, Aesop, depicted those fears well in his story of the Fox and the Grapes, and the story is apropos, as is this bit of wisdom from the hiker-forums. When someone is proposing plans of what he intends to do and begins to attract a lot of criticism, a more experienced hand will inevitably step in and say: “Hey, critics. Hike your own hike.”

I’d humbly suggest that bit of wisdom applies here. What I do is what I do, and I’m very good at it. If you want to benefit from my experience, you can. If you want to ignore me, you can. If our paths occasionally cross, well and good. If they don’t, then well and good as well.

But no one can say that I don't hike my own hike through the investment world, nor that I fail to reach my destination.

Charlie

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http://en.wikipedia.org/wiki/The_Fox_and_the_Grapes

http://whiteblaze.net/forum/showthread.php?t=52273
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