Claire Corlett

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How to Avoid Myopic Loss Aversion | Ken Fisher | Fisher Investments [2019]

How to Avoid Myopic Loss Aversion | Ken Fisher | Fisher Investments [2019]

Myopic loss aversion is… a behavioral term to… more or less, indicate
that we can be… too short-sighted. We tend not to think as much
about the longer term. We tend to think that all of the progress in the past that got us to this point in history in terms of innovation and development
of whatever type, is kinda over and we don’t actually
expect that much in the future and we think about news and fear and headlines about
what might impact the next few months, or the next week, or the next two days
in the stock market, more than we think about
where we’re going in the long term. The fact of the matter is,
and it’s always been true, that the short term’s pretty much
impossible for anybody to predict with any real accuracy. Anybody that tells you
they know where the stock market’s going in the next three weeks is
almost certainly wrong most of the time. In the long term, going back to
the famous Warren Buffett line that in the long term,
markets are a weighing machine, there’s a better ability to predict
where things will be. Progress and innovation
and development and growth tend to continue. Predicting that’s not terribly precise. But you just stop and think about
all the things that you’ve seen in your lifetime, in the last ten years, twenty years,
that have improved. And just kind of extend those off
to the next 10 to 20 years, of more of that same,
which is almost certainly true. You just can’t predict exactly which
of those kinds of new things will come along. And think through how much better
that will be, and kind of forget that short-term noise. The short-term noise
isn’t always wrong, but it’s usually wrong,
and even when it’s right, trying to bet on it
is usually wrong. So a double wrong
can’t make a right. You wanna stop and think,
every time you’re feeling short-term, about what that long-term is, and, in the vernacular
of that song from Fleetwood Mac, “Don’t stop thinking about tomorrow.”

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