In a previous blog post (The Dumbest Investment Ever), Hoy Grimm explored the shifting tides of market speculation, historical crashes, and the dangers that lurk for today’s investors. He highlighted the evolution from the early days of bucket shops in the late 1800s to modern, highly leveraged Exchange-Traded Funds (ETFs), which have captivated risk-takers with their promises of amplified returns. Yet, at the heart of both financial success and failure lies something more fundamental: Attention Management.
October, with its historic market crashes, serves as a fitting reminder of the consequences of distraction and overindulgence in risk. Black Monday in 1987 and Black Tuesday in 1929 are stark examples of what happens when market exuberance becomes blind risk-taking. Today, the presence of sophisticated trading curbs and complex financial instruments still doesn’t change the fundamentals – when emotions drive attention, chaos often follows.
Fast forward to 2024, and we find a financial landscape filled with tools that can magnify gains but also accelerate losses. ETFs designed to triple the daily moves of volatile stocks like Nvidia or MicroStrategy are akin to putting your attention – and money – on the line in a game of chance (think red or black, roulette wheel). What has always been true, now more than ever, is that what gets your attention will shape your financial destiny.
Attention management isn’t just a trendy phrase – it’s a vital part of ensuring that your behavioral choices are in line with your long-term goals. The financial world is designed to pull your focus in every direction, bombarding you with constant market updates, “can’t-miss” opportunities, and fear-of-missing-out (FOMO) moments. In this environment, managing where your attention goes is not merely a productivity hack; it’s a survival tool.
Beware of overwhelming financial choices. Wall Street has always been adept at creating products that are alluring but dangerous. The highly leveraged ETFs we discussed previously are a perfect example. They may attract attention, but these tools are designed for speculation, not long-term wealth building. They often lead to rapid financial gains, but also to crushing losses. Remember: attention flows where the excitement is, but wise investors direct their focus where consistency and stability are.
In an age where distractions are plentiful, managing where your energy goes is crucial. Instead of constantly worrying about the latest headline or the daily movement of highly volatile stocks (while it can be entertaining), focus on your broader purpose. A well-crafted Purpose Built Plan doesn’t involve betting on leveraged products or trying to time market cycles. It involves staying disciplined, understanding your long-term objectives, and limiting attention to things that genuinely matter (less fun, but will get you to your goal).
In the markets, you don’t control the daily ups and downs. You can’t control the hype around individual companies or whether government regulations adequately protect investors. What you can control is your behavioral response. By practicing attention management, you are less likely to be influenced by market hysteria and more likely to make decisions aligned with your financial purpose.
As Hoy emphasized, the Attention Economy – social media, financial news, and countless apps are all competing for one thing – your focus. This scramble for attention directly impacts behavioral choices, often pushing people toward impulsive financial decisions. During the Roaring Twenties, financial speculation was rampant, and distractions were plenty, even without modern technology. Today, the distractions are more pervasive, and the stakes are often higher. The principles of human behavior, however, have not changed. Our tendency to chase excitement, to seek out what appears to offer the quickest reward, is still here. Attention management is a skill that helps you navigate this landscape, ensuring your actions are in service of your true financial purpose.
Our Purpose Built Planning approach (soon to be included – behavioral and cognitive coaching) is grounded in helping clients direct their attention where it truly matters. It’s about focusing on sustainable, goal-oriented strategies rather than chasing the latest market trend. When leveraged ETFs and single-stock roller coasters try to pull you into their storm, we aim to provide an anchor. It’s a simple choice, yet not an easy one: keeping your focus on building wealth responsibly rather than gambling on daily price swings.
As we move into the final quarter of the year, take a moment to reflect on where your attention is going (my wife and I do a version of this semi-annually to make sure we are pushing the same plow, as well as pushing it in the same direction). Are you fixated on daily price movements, or are you centered on your long-term objectives?
The allure of high-risk products and the noise of an over-stimulated market are not going anywhere. But your attention – managed correctly – can act as a compass, pointing you toward financial resilience instead of financial regret. In our Purpose Built Planning process, we emphasize that true success isn’t just about market knowledge or making the perfect stock pick; it’s about aligning your attention and behavioral choices with your life purpose. Staying focused on what’s controllable and ignoring the noise is how you build a story worth telling.
If you’re curious how our team can help align your attention with your financial goals as we head into the new year, feel free to reach out.