It is well known that investors damage their investment performance by selling out when fear is high, which is when the stock market is lower.  Then, they are slow to re-enter the stock market, missing its rise.  This is a very normal, if harmful, human behavior.  Yesterday, I heard a financial advisor describe a conversation with a client, where the client said to the advisor:  “I don’t pay you to manage my money.  I pay you to manage my fears!”

I get the point:  To protect a client’s portfolio, I must fight them when they are afraid and want to sell.  But, I question how black & white that should be.  There is more to taking care of a client than the value of their portfolio.  I would always tell a client they are making a mistake, but not all people are alike.  Some people can be re-assured, while others will fret and worry themselves sick.  Have we really helped a client if they can no longer sleep at night?

In another “softer” lecture, I learned that widowers are ten times more likely to get remarried than widows over age 65.  (This led to a humorous discussion of the “first casserole rule” – the first widow to deliver a casserole to a new widower wins!)  But, that raises financial planning concerns:  do we have an obligation to protect the inheritance of widower’s children or do we encourage the widower to enjoy the remainder of his life?  Again, there is no black & white rule – we need to adjust our advice to the individual client.  Some widowers have the ability to enjoy life, and some don’t.

And, some people say that economics is a “fuzzy science” . . . ?!?!