Financial Anxiety is Driving Americans Nuts

For almost two weeks in May 2016 I attended a workshop designed for accountants and financial advisors to collaborate and learn how to take better care of our respective clients. As we were sharing jokes in one of our breakout sessions Ron Stiller, the primary instructor at CPA Network declared “the average American has the attention span of 7 to 8 seconds.” I cracked up at what I thought was a joke with my retort, “That’s about the same time frame as a gold fish!” We all laughed. Then I did my homework. In the old days, BG (Before Google) I would have had to go to the library to check on what I heard. AG (After Google) I see that Ron wasn’t joking at all and I was wrong.

According to scientists, thanks to Telegraph Science and Tech, “The age of smartphones has left humans with such a short attention span even a goldfish can hold a thought for longer.” Results of a study of 2,000 Canadians using electroencephalograms of the brain activity of 112 revealed “the average human attention span has fallen from 12 seconds in 2000, or around the time the mobile revolution began to 8 seconds. Goldfish, meanwhile, are believed to have an attention span of 9 seconds.”

Thanks to smartphones humans have shorter attention span than goldfish

Here’s some good news. Tech giant Microsoft performed the study and it also found that the ability of humans to multitask has improved. Let me suggest if you are planning your next vacation that you devote the same amount of time, perhaps at the same time, to plan your financial future.

There are so many ways we lose our minds with all of the things we think we have to do simultaneously we are having trouble focusing on what really matters. Please answer this question for yourself. What is your personal definition of peace and prosperity? If you can’t answer that question who will answer it for you? Or maybe you think you can simply stay online to spend your way to happiness and prosperity. Good luck with that.

Here’s a real big problem. 85% of American adults experience financial anxiety and 28% worry about their finances every single day, according to a February 2016, Northwestern Mutual survey.

 This statistic comes from the National Institute of Retirement Security. The Retirement Crisis (2013): Is It worse Than We Think? June 2013. It means that 9 out of 10 of us are unprepared for retirement, leaving only 1 out of 10 prepared.

“The pessimist complains about the wind, the optimist expects it to change, but the realist adjusts the sails.” – William Arthur Ward

“The US economic recovery is so fragile right now that it cannot sustain another headwind,” according to MSN Money on June 15, 2016. In a move that was widely expected, the Fed voted to leave short-term interest rates at their historically low levels. One thing the stock markets dislikes is uncertainty. From the same source, “Given the sharp decline in job creation in May, weak domestic economic growth, and continued worries over events abroad,” a rate hike wasn’t in the cards. I am fond of saying, it’s never the bus you can see that can disrupt your day when crossing the street, it’s always the bus you didn’t see, cannot time or name. One situation that does have markets attention is the June 23 referendum in Great Britain that could have the UK leaving the European Union. Such a move could raise a host of current uncertainties about the overall economy.

Here’s something else to keep your eyes on. As John Del Vecchio, Forensic Investor observed on June 15, 2016, “It’s one thing when some online commenter yells “fire” in the crowded stock market theater, expecting investors to jump ship and dump their investments before” something awful unfolds. “ It’s another story when multi-billionaires who made their fortunes from speculation take huge bearish bets in the market” says Del Vecchio.

Shift happens; determine what is & what may not be sustainable

It appears that we are in the midst of one of the longest bull markets ever. One after another, however, the billionaires like George Soros, who famously made $1 billion in a day shorting the British Pound, has made a massive short bet in the S&P 500, according to Del Vecchio. Carl Icahn has made a huge bearish shift to his portfolio. According to Barron’s, Icahn was 149% short at the end of the quarter compared with 25% at year-end 2015. Then we have Paul Singer, Del Vecchio observes, “who is less well known than Soros and Icahn, but still an investment powerhouse in his own right, is joining the fray loading up on gold.” These gentlemen appear to be placing bets that there could be more downside than upside so they are looking to capitalize on potential losses. Do you have a plan?

Please remember the 80/80 Rule. You want to see how you might miss 80% of a market loss and look to capture 80% of an up-market. If your loss is -20% you need a gain of 25% to get back to even. If there is a drawdown due to withdrawal or market loss totaling -60% your portfolio requires a 150% increase in account value. I prefer the odds on the first situation. I don’t like the odds of needing a gain of 150% to get back to even in our hypothetical scenario.

You know that things are moving faster than ever. Do you know if your portfolio is up to speed? You make the time to get a second medical opinion about your health. Take this opportunity to get a second opinion about your wealth.

We are on a mission to save your assets.

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