Going Negative - Old Peak Finance

Going Negative

November 26, 2014

goingnegative

Going Negative

November 26, 2014

We’ve just finished another election season filled with attack ads. It seems the way to win is to criticize your opponent and play on our fears, real or imagined.

Years ago, financial advisors also discovered that scare tactics sell. Take a look at three options an advisor has to woo clients, and you’ll see why “going negative” is so popular.

Option 1: “Hooray! Buy, buy, buy!” Your likely reaction: “I don’t trust him” or “Great! But if money is growing on trees, why do I need him?”

Option 2: “Experience over the past 100 years demonstrates that the short-term is unpredictable, but in the long-term, a patient approach invested in a reasonable mix of stocks and bonds will generate an attractive return. Ignore the noise and focus on the horizon.” Your likely reaction: “ZZZZZZZ.”

Option 3: “The Fed’s money-printing will lead us, inevitably, to financial ruin. Gold will soar. The dollar will plummet. Your grandchildren will be paupers … unless you protect yourself with our unique investment strategy.” Your likely reaction: “Hmmm … maybe he’s right. Things do seem very uncertain. I better learn more about his fund.”

I don’t mean to belittle concerns about our economy. We do have real problems. We also had huge challenges in the 1870s (“Panic of 1873”), 1890s (“Panic of 1893”), 1930s (Great Depression), 1940s (WWII), 1960s (civil rights protests, Vietnam), 1970s (inflation and the energy crisis), 1980s (record high interest rates) and 2000s (dot-com collapse, 9/11, Iraq war, mortgage crisis).

A wise person might observe that the US is resilient and will likely work through whatever problems we face. She’d probably be right. But she wouldn’t attract as many clients.

This article is not intended to provide tax, legal, accounting, financial, or professional advice. Readers should seek advice from qualified professionals who can review their specific circumstances. Old Peak Finance endeavors to provide information that is accurate and current. However, we cannot guarantee that this information has not been outdated or otherwise rendered incorrect by new research, legislation, or other changes. Old Peak Finance has no liability or responsibility to any individual or entity with respect to losses or damages caused or alleged to be caused, directly or indirectly, by the information contained on this website.

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