It may seem like a contradiction to discuss the wisdom of being ignorant. Ignorance, defined as a lack of knowledge or information, is not generally viewed as a positive attribute. However, it is absolutely essential in our daily lives for our personal success – both financial and psychological.
We may be ignorant to how cell phones actually transmit voices instantaneously across the globe to another person. We know that taking medicine makes us feel better, but may be ignorant to how the pill interacts with cells to make it all happen. We are grateful other people know this, so we can benefit from their knowledge. If we weren’t ignorant about certain things, we wouldn’t have the capacity to become an expert or specialist in other things.
There is simply too much information for us to process everything. Selective attention and ignorance not only make the economies function, but they make us all need each other. We value each other, and are grateful for others’ expertise where we are ignorant, and vice versa.
When it comes to investing, ignorance truly is bliss. The news story of the day, the quote of the hour, and the many unreliable predictions do not help investors achieve better results. To the contrary, many studies have shown that investors that pay attention to such fleeting information trade more often and achieve lower returns.1 In addition, the constantly changing market information produces greater stress and anxiety, which may weigh heavily on our personal lives and relationships.
As we come upon the Thanksgiving season, let us be grateful that we have the choice of what we pay attention to, and what we ignore. We cannot control the volume or frequency of information, but we can choose what we allow in our minds.
In investing, there is always something to worry about; always has been, always will be. We are grateful you chose to rely on the knowledge and expertise of Biondo Investment Advisors, to take the worry out of managing your investments, so you can focus your time and attention on what really matters.
- Dalbar, Inc. Quantitative Analysis of Investor Behavior
Source: ©2021 Behavioral Finance Network. Used with permission.