ostrichism

Ostriches don’t actually stick their heads in the sand, despite what Bugs Bunny cartoons and op-ed cartoons might tell you:

When lying down and hiding from predators, the birds lay their head and neck flat on the ground, making them appear as a mound of earth from a distance. This even works for the males, as they hold their wings and tail low so that the heat haze of the hot, dry air that often occurs in their habitat aids in making them appear as a nondescript dark lump.  (link)

I will still use that as a metaphor for financial behavior, though – it’s just too useful to discard. I know that I’ve been guilty of ostrichism recently.  Although I’ve paid a lot of attention to what’s going on in the markets, I’ve also engaged in a certain amount of avoidance.  I haven’t started insisting that we turn off all the light and huddle in one room, or save aluminum foil, or hoard food scraps.  I assume that this is a glitch and at most we might be inconvenienced by the downturn in our stock portfolios.

photo credit: jimbowen0306

To become a successful investor in the broad-average sense of the word (an index fund investor who doesn’t try to out-Buffet Buffet), you need to be able to put your head in the sand from time to time. You need to shut out the screaming and self-flagellating TV personalities and realize this:  a stock market correction is a stock market correction.  People are still going to their jobs:  assembling cars, processing invoices, filing claims and flipping burgers.  Very little of that has changed.  If you want to pretend that stock market fluctuations are affecting the ability of the nation to get up, go to work and grab a coffee along the way you can go ahead and think that way, but the reality is that life goes on. Stick your head in the sand.  If you were happy with what you were doing in terms of investing and saving, stick to it.