“Well… are YOU doing it?”
Ahh… Those famous words from people who are seeking some validity, comfort, and assurance that information being shared is reputable.
The more important question to answer that matters: Is the broadest cross-section of national leaders doing it?
Opposed to any strategy working in anecdotal one-off scenarios, can we identify and rally behind methodologies that have been used, tested, and embraced more broadly among the idealized population, than by merely looking at any one individual?
We probably naturally ask questions about what individuals are doing, likely as a relic of our instinctual approach to survival. Prior to the ‘information age’, humans had to rely on the ‘rumor mill’, the ‘grapevine’, or having their ‘ear to the ground’.
With advancements in information technology, macroeconomic trends are much less of a secret today. Libraries of information and research on household wealth and strategies used to attain it (and lose it), are easily accessible in minutes from the palm of our hands.
In minutes, we can review trends and best practices of an idealized group of people found around the globe. Never before in the history of mankind did we have this level of access to information.
In minutes, we can identify economically viable skills to learn and begin practicing and using those skills.
No longer is it necessary – much less beneficial – to identify any one person and celebrate them as “the model” when we have access to broader trends revealing what works and what doesn’t.
Certainly, it feels good to point to individuals who are idolized models, and feels even better to know that they’re our friends.
But most of us simply don’t have ultra high net worth people as friends because there are only 73,000+ of them in the US. Even in the unlikely event of meeting ONE person among those 73,000 individuals, does not accurately reveal nor represent best practices among the broader group.
Society and social structures rely far too heavily on this ineffective approach of ‘watching friends’, which tends to precede some of our biggest financial decisions, such as buying a house or purchasing formal education. Again, this is less likely a consequence of social media, than it is a relic of our natural characteristic to find some protection and security in the ‘herd’.
These natural proclivities that we have towards doing what all our friends are doing, particularly in economics, tend to lead to bubbles and systemic imbalances.
Now we are seeing disruptions in economic stability, which are only the inevitable consequences of systemic economic imbalances.
The omnipotent US Government is even now wrestling with big systemic economic imbalances, such as 1) how to respond to pension plans in default amidst paltry and declining savings rates, or 2) how to respond to student loan default rates now at crisis levels, or how in the recent decade 3) we have had to use Federally-backed bailouts to avert a massive 2008 banking shutdown in the American commercial sectors.
Let’s face it: Americans are bad with their money. Do we really want to ask any of our friends – much less strangers – what they’re doing with their money on our search for reputable strategies and methodologies to manage our own investments?
Notwithstanding individual successes, what any one person is doing or has done absolutely does not add validity to information. Trend traders will say that ‘one day does not make a trend’. Similarly, one person’s success does not confirm whether or not strategies and methodologies are reputable.
Try hard to make decisions based upon ‘aggregate’ data.
What is happening across the country? What is happening in certain places of the country where I could fairly easily move and live? What is happening across groups of millions of people, and how can I change my actions to somehow beat the crowd?
Independently and quietly invest into your own private research efforts.
Leave the approval of others out of your personal financial decisions.
Let’s challenge ourselves to think beyond what any one person is doing.
Anecdotal stories are fun to discuss, but have a tendency to be attractions and distractions from identifying and elucidating best practices that can only be extracted when viewing trends within broader populations.