The Hungry Vulture

Read Time / 2 Minutes

Theme / Behavioral Finance

Driving through the quiet city streets before the hustle of the morning, I noticed something abnormal lying in the road directly in front of me.  

The large road kill gripped my attention and seduced a vulture off in the distance.  My heart dropped.  Risking everything, this determined creature flew in front of my car thinking he found his next meal.

Though witnessing an animal playing “Frogger” is far from an anomaly, this time it provoked reflection.  “What was this vulture’s plan?” I wondered.  Wisdom would have suggested waiting for the death trap to pass before grabbing his snack. Was it fear that compelled him to risk everything? What areas of our lives are we similar in taking superfluous risks?

As investors, we often do this with market timing.  In 2009, a stock mutual fund — CGM Focused Fund — was awarded the decade’s best performer, returning a whopping annual average of 18%.  While it’s buy and hold investors made handsome profits during the infamous lost decade, this was not the experience of every CGM investor.  In fact, the average investor realized a loss instead of a return.  How you may ask?  Great question — market timing.  Investors were often caught buying during periods of market hype and selling at market declines. This left the average investor with an 11% average loss annually.  Yikes!

Fear and greed have been the common snare for investors since the beginning.  Proverbs 5:23 states, “he dies for lack of discipline, and because of his great folly, he is led astray.”  Discipline is a byproduct of setting goals with intentionality.  This requires an understanding of our values and the necessary steps to live those values out.  Proverbs resumes in 24:6, “for by wise guidance you can wage your war, and in abundance of counselors there is victory.”  The antidote to our risky behaviors is a plan accompanied by wise counsel.

I wonder if the vulture asked any of his breathing, well fed friends for advice on meal planning.

Ryan De Amicis

Wealth Advisor

408.758.6413

ryan@christianwm.com