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Don't Be a "Christmas Card" Investor

Our Best Image

You likely received a few Christmas cards in the mail this year. Did you receive any cards where the parents had their eyes closed? Any with a child throwing a tantrum? Picking their nose? Likely not. 

As humans, we like to put the best image of ourselves forward. This has always been true of us.

 At this moment in time, we have more ways to project the best image of ourselves than ever before: Instagram, Facebook, and even Christmas cards (they used to just be cards not photos, right?)

We generally have the choice as to what others see or know about our lives -- whether it's what we post on social media or what we share in conversations. Rest assured, whatever you see of your friends and acquaintances is usually only their best pictures or moments.

I recently learned that the blogger responsible for stoking my initial interest in personal finance is now divorced. His blog was an open book display of how awesome his family was and how smart they were with their money. He didn't post about the ways his marriage was falling apart. I only knew of his successes because that's all he shared.

But he's not unique. No one posts selfies while at marriage counseling. No one catches up with an acquaintance by sharing their low-lights since they last spoke.  And no one uses their family photo outtakes to send to everyone on the holidays. But what if we did? I'll start.

Graham discovers the sky. Sophie Sue thinks she sees a ghost. But Madeline looks beautiful.
Tired of it all, I engage the fake smile. Graham is smacking his lips from all the candy since we bribe our kids to get them to do what we want. Sophie Sue is freezing because we waited until late November to shoot these, so it was only 30 degrees. But Madeline looks beautiful.
I'm trying to hold it together for dear life. Graham discovers the grass and decides to flaunt his midriff. Sophie Sue is licking the remnants of her candy bribe. But Madeline still looks beautiful.

I decided to nap for this picture. Graham is counting his candy.  Sophie Sue is wondering if she just saw another ghost. Madeline still looks beautiful, but at least you can only see half of her face.

Our Best Investments

Following this pattern, people also love to tell you their best investment decisions while conveniently leaving out their worst. The guy who boasts about buying Amazon stock back in 2004 will surely never reveal how much he lost on an obscure biotech stock in 2012. 

Since you've seen my family picture outtakes, I may as well share with you my most recent investment outtake as well. Madeline and I are in our early-mid thirties, so we've always had an aggressive portolio...but, not the MOST aggressive. Back in November, I thought to myself, "We can't even touch this money for at least 25 years, so we might as well go pedal to the metal." And we did...right before the market drop. Having more risk when things are going up is great, but it doesn't feel so good when things go south! There was no way for us to know that we'd have a nearly 20% market decline in the following months. Even though we have a very long time horizon, it still doesn't feel good.  

Timing a Stock Market Decline

To make matters worse, after the recent market decline, how many of your friends have said that they got out of the market before the drop? I've heard a few people say that already. And each time I wince. 

I wince not because I'm jealous (well, maybe a little). I wince because when you attempt to time the market, you have to be right not once, but twice. They now face the tall task of picking the correct time to "get back in." I wince because that's likely not the first time they have jumped out of the market. I know many folks who thought we were at a market top back in 2013 and they jumped out as well. When did they get back in? And I wince because if they continue to try to time the market, odds are they will eventually make a poor timing decision from which they may never recover. 

What Aren't They Telling You?

Most people want to be perceived as smart, good-looking, wealthy, or some variation of those traits. But when someone is honest about their flaws or mistakes, it breaks the negative cycle of signaling for those traits and the jealousy it produces in others. Hopefully, I accomplished that with this post.

Before you are stung with jealousy or regret the next time you see your friend's best moments or hear of their best investment, remember to consider what they aren't telling you.