(Mike Maharrey, Money Metals News Service) Don’t just do something; stand there! Turns out this might be a pretty good investment strategy.
Research conducted by Dalbar, Fidelity, and Vanguard reveals that dead people tend to be better investors than the living.
Now, I’m not suggesting suicide here. But you can adopt the strategy a dead person would employ – doing absolutely nothing (Because, obviously, that’s all a dead person can do).
Based on the abovementioned research, the best investors aren’t necessarily the smartest people. They don’t have degrees in finance. They aren’t even the most experienced. They’re dead. Or perhaps they’re still walking among us, but they forgot they had an investment account.
How does this make sense?
Well, if you’re dead or don’t realize you have an account, you aren’t going to tinker with it. You just let it ride. You don’t overreact to every news headline. You don’t panic when the Dow has a down day. You don’t freak out when you see our precious metals ticker bleeding red.
Business coach Nat Berman put it this way in a post on X:
“The best investors are patient, consistent, and almost boring. They set a strategy, automate contributions, and let compounding do the work. They don’t let emotions drive decisions and are humble about what they can’t predict. The traits that create exceptional investors are all learnable: patience, consistency, humility, and emotional control.”
One of the key points here is that dead people don’t get caught up in their feelz.
Humans are emotional beings, and emotions often drive our decision-making. I’m not prone to panic or rejoice over daily price movements. Still, I’ll confess that when gold and silver sold off steeply in January, I was a little uncomfortable watching the negative numbers get bigger and bigger. And I’m not going to lie. Selling crossed my mind.
Brad Klontz is a certified financial planner and financial psychologist. He says human behavior is the biggest threat to our portfolio.
“It’s them selling [investments] when they’re in a panic state, and conversely, buying when they’re all excited. We are our own worst enemy, and it’s why dead investors outperform the living.”
Klontz said humans are evolutionarily wired to “run with the herd.”
“Our approach to investing is actually psychologically the absolute wrong way to invest, but we’re wired to do it that way.”
Ritholtz Wealth Management CIO Barry Ritholtz agreed, saying big market moves can trigger a “fight or flight” response in our brains.
“We evolved to survive and adapt on the savanna, and our intuition … wants us to make an immediate emotional response. That immediate response never has a good outcome in the financial markets.”
Of course, I don’t really mean you should completely ignore your portfolio. That would be foolish. You do need to adjust from time to time. And there are times to buy and a time to sell.
If you watch the markets at all, you know that every bit of news seems to drive some kind of move. But almost all of them are short-lived. So, you don’t want to react to every new post that pops up on X. Trying to time the markets based on what has become a 30-second news cycle will wreck your savings and your sanity.
It’s not that you should ignore headlines completely, but you should always try to put them in a broader context. This is why I constantly emphasize the macro environment. When you see a price swing, ask yourself, “Did anything just happen signaling a change in the fundamentals?” If the answer is yes, well, it might be time to make a move. But if the answer is no, you probably want to stand pat.
I’ll give you an example. Every time people imagine the Federal Reserve might not ease monetary policy as quickly as hoped, gold sells off. However, when you have an economy with a Debt Black Hole and a government that can’t stop borrowing and spending, you know that the central bank is going to have to set policy to accommodate those realities. Words dribbling out of the mouths of Fed members, or a data release that seems to indicate inflation is still running hot doesn’t change those fiscal realities. So, when the markets react to those things, it will eventually unwind that trade because it’s not rooted in reality.
You don’t have to be dead to be a good investor. You don’t even need to be dead inside. But you do need to keep your emotions in check, stay focused on the fundamentals, and don’t react to every single news headline or price move.
And when it comes to gold, remember that the powers that be are always going to be debasing your currency. You lose purchasing power week after week. No headline is going to change that reality!
Mike Maharrey is a journalist and market analyst for Money Metals with over a decade of experience in precious metals. He holds a BS in accounting from the University of Kentucky and a BA in journalism from the University of South Florida.
