You can remove your own appendix, right?

I read an article this morning in the Wall Street Journal entitled, “What’s Wrong With the U.S. Economy?? It’s You, Not the Data.” ?The title was a good hook, and I suspected I knew where the article was going.? I won’t spoil it all for you—you should read it and have all your clients read it, too—but ultimately the article describes how our biases, prejudices and, tacitly acknowledged emotions, cloud our recognition of the facts.?

It's true that today, versus several years ago, things cost more.? However, the fact also remains that the economy is strong and is headed in the right direction.? Inflation is slowing, wage growth is steady, savings account interest rates are up, and the stock market seems to break a new record weekly.? But, thanks to our lizard brains, most Americans believe that the economy (and perhaps the country) is going down the tubes.?

I once had a conversation with a client about self-directed investing.? The client was a retired engineer, was extremely well-read, and since stopping working, had taken to reading just about every word of financial press printed every day.? I couldn’t really keep up with his encyclopedic knowledge of the facts, and so I asked him, “What’s the simplest surgery to perform?”? He replied confidently, “An appendectomy.”? He was right, of course—Johns Hopkins, Stanford and other institutions list the procedure as among the most common and simple surgeries.?

I then asked my client, “If I gave you a how-to book on the appendectomy on Friday, do you think on Monday you could perform one?? You’d have skilled surgical nurses, an anesthesiologist, and all the proper tools.”? He replied confidently, “Sure, I suppose I could do that.”

“Okay, then.? What if I told you that the patient was going to be you and that you’d be removing your own appendix?”

He laughed, said that was ridiculous and asked me, “What’s your point?” ?I told him, “Look, I’ll be the first to admit that investment management and the capital markets can be learned, maybe even self-taught to a certain degree.? But ultimately, like an appendectomy, we neither have the reach, the perspective, nor the pain tolerance to advise ourselves.”? ??

Another well-read person might counter the above with a quote from Mark Twain, “There are 3 kinds of lies: lies, damned lies, and statistics.”? Twain was implying that statistics can indeed be used to deepen a lie.? To that, I would say, certainly—but the lies we tell ourselves are more harmful than any damned lies or statistics.

Collect data from multiple sources, seek advice outside your own bubble, and table your biases--ignorance, the echo chamber and prejudice play no effective roles in decision making, whether about your investments, estate plan or, perhaps, any major life endeavor.

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