Have you ever watched the show, “What would you do?” Or ever seen a character in a movie running from a would-be assassin and think, “Well, duh, she should just (fill in the blank). That’s why I would do!” But would you?

Chances are not. Chances are you have no idea how you would behave in that moment unless you trained for it. In the heat of the moment, all bets are off thanks to our emotions. Psychologists call this the “empathy gap.” The empathy gap describes our inability to predict how we would behave in future scenarios under emotional strain. We underestimate the influence of our emotional state on our decisions and behaviors and overestimate the intellectual influence on our decision making. In other words, we’re not as smart as we think.

For investors this is a big problem. When the markets are just bumbling along boringly, we think to ourselves, well here’s how I would have handled the 2008 financial crisis, or here’s what I would have done during the tech bubble. To that I say… fat chance!

Those that survive crises are those that have a rigid, rules-based system in place BEFORE the crisis hits and stick to their system thereby removing the human emotional element. That’s why we’ve developed a disciplined, rigorously tested, rules-based investment process that guides our investment decisions on behalf of our clients. We believe this is far superior to relying on subjective, error-prone human judgment. And we believe we and our clients will be better for it in the end.  

Want to learn more? Call us today at 888-510-2362