Anxiety makes for big business. Everyone from therapists to pharmaceutical companies to Wall Street all prey on your insecurities and anxiety to make big bucks from the millions of people who suffer from anxiety at all levels.
The world of investing is especially focused on tapping into your insecurities and anxiety. Daily and hourly, you can easily drown in the media’s pontification of the markets. From talking heads to podcasters to hucksters selling investing courses, everyone wants a piece of your wallet – all pushing doom and gloom for not investing in that can’t miss Wall Street offering or the latest and greatest meme stock or cryptocurrency.
The Wall Street players – big and small – push that one hot button they know works every time. They prey on your anxiety from the fear of missing out, and most of the time, it works. We as humans are hard-wired to follow the herd, and imagining ourselves lost from the crowd makes many of us anxious and makes us want to avoid ever being in that position.
Every day, investors are faced with a never-ending sea of investment choices:
- To crypto or not to crypto? If so, which one? Bitcoin, Ethereum, Litecoin, Cardano, Polkadot, Dogecoin, Shiba Inu?
- Everyone’s talking about this and that meme stock. Should I buy into the buzz?
- To invest in ETFs or not. If so, what type of strategy should I pursue? Dollar-Cost Averaging, Asset Allocation, Swing Trading, Sector Rotation, Short Selling, Betting on Seasonal Trends, Hedging?
- Does a guaranteed income product make sense? What about Annuities?
- Should I include fixed-income assets in my portfolio? Government treasuries? Corporate bonds?
- Are precious metals good hedges against inflation? Which one? Gold or Silver?
- What’s the next big eco-trend? Lithium for batteries is next.
The choices are endless. It’s chaos, and it can drive you mad.
The real-world result from all of this media-induced chaos and anxiety is trigger-happy investors who jump in and out of investments at the drop of a hat – reluctantly going along with the mob from fear of missing out.
Driven by the masses and mass media, individual investors lose their individuality and cease making judgments independently.
The crowd makes the decisions for them, and this often results in irrational behavior – doing things with the crowd they normally wouldn’t do on their own.
One of the biggest drivers of irrational behavior is the need by investors to be an “early adopter” or to be one of the first to jump on the bandwagon of the next big thing. That’s because everyone’s playing the timing game. They’re betting that a trend will go in a certain direction and that if they buy in or sell-off at the right time, they can profit from their anticipation skills. The problem is, nobody is good at the timing game. It’s nothing more than speculation and gambling. It’s another way Wall Street preys on anxiety.
Jittery investors mean trigger happy investors, and the more trigger happy the investors, the more they’re going to trade in anticipation of a certain stock or crypto movement.
It’s like anxious gamblers who constantly move their chips around at the roulette wheel before the ball drops – unable to settle on a choice. Of course, Wall Street profits from all of this trading activity and encourages this type of behavior. Anxiety is good for business.
Savvy investors don’t fall into the common investment traps. They avoid anxiety by avoiding the things that trigger it. They don’t need to be driving in the howling race car that can crash at any moment. They’re content with the old reliable vehicle that will get them to their destination safely and surely. That’s why they’re content with boring investments like commercial real estate (CRE) and private equity.
The crowds may be laughing at this group of investors and asking them why they stick with such boring, unexciting investments. It’s not in the news, nobody talks about them on social media, and Elon Musk doesn’t tweet about them. To the public, there’s nothing special about them. They’re boring.
The truth is those investments – CRE and private equity – are preferred by the richest investors in the US and around the world. CRE and PE work, but why does the average investor allocate almost all their portfolios to stocks and crypto while the rich allocate a majority to CRE and PE?
It’s because of everything I’ve talked about. The masses go for liquid investments that they jump in and out of because of their liquidity. CRE and PE, on the other hand, are illiquid with lockup periods measured in years and not in seconds like with stocks.
CRE and PE are not for the anxious ADD investment crowd. They’re not for those who look to Twitter for investment advice or for those who are easily swayed by a tip on Reddit. Their illiquidity is a turnoff to the middle class, who view illiquidity as risky, but in actuality, the savvy investor knows better.
Illiquidity reduces risk. It protects your investments from the madness of the crowds.
Besides, savvy investors have no interest in active trading. They don’t have the time and don’t need the headaches. They prefer to invest in passive CRE and PE to buy back their time and benefit from significant tax benefits, long-term growth, and income.
What is your anxiety level when it comes to investing?
Here are five things you can do now to lower your investment anxiety:
- Ignore Your Phones. A claustrophobic person avoids tight and crowded spaces. To avoid anxiety, avoid the things that give people anxiety. Peoples’ phones and everything available are the #1 cause of anxiety in the modern world. If you want to stop investing in anxiety, ignore your phones. Stop checking the news, turn off your notifications, and stop checking social media.
- Catch Yourself. What do you do when you catch yourself doing something you deplore? You stop the behavior. Another strategy for avoiding investing anxiety is to realize when you’re shiny object chasing and trying to find the next big thing.
- Know The Difference Between Trading And Investing. Trading is rolling the dice. It’s speculation. It’s counting on everyone else being one step behind you when they’re never really are. Trading is solely based on hunches. On the other hand, investing is driven by time and not timing and based on underlying economic fundamentals and not hunches. Investing allows an asset to grow and blossom, which will eventually bear fruit in the form of cash flow, appreciation, and tax benefits.
- Take Human Behavior Out Of The Equation. Do you know how to resist jumping ship when you feel an investment isn’t going your way? Handcuff yourself to the ship. Illiquid investments like CRE and PE prevent investors from jumping ship by tying down their capital for a minimum of 3-5 years. This illiquidity is good at preventing investors from acting on their urges to liquidate their holdings.
- Follow The Richest Investors In Their Investment Model. Following the crowd has proven time and again to be detrimental to the average investor prone to investment anxiety. The richest investors, on the other hand, don’t suffer from investment anxiety. That’s because they prefer long-term assets like CRE and PE that eliminate all the noise. Knowing they’re going to be in it for the long haul with these investments, these ultra-wealthy investors breathe easy and let the assets and their managers work their magic -a magic that has proven time and time again to be real. If you want investment success, follow those who have achieved success, not those who have achieved mediocrity.
In a world of investment noise and anxiety, there’s a simple cure. Invest in assets where returns have nothing to do with what social media, the news, or the public thinks about them.
That’s why the rich are drawn to assets like CRE and PE are unaffected by internet buzz or social media hype. They go about doing their business of delivering wealth and financial independence to their investors.
If you covet this path, follow those who have already completed it successfully. Follow the habits of the ultra-wealthy investor.
Kyle Jones is a co-founder and Key Principal of TruePoint Capital, LLC. Kyle is responsible for the company’s strategic planning, investment decisions, asset management, and overseeing all aspects of the company’s financial activities, operations, and investor relations.
Kyle obtained a Bachelor of Science degree from Texas State University – San Marcos, where he also played Division 1 Baseball.