Healthy Brain, Healthy Returns

Healthy Brain, Healthy Returns

May 29, 2024

Earlier this month Coastwise held a great event featuring Dr. Marc Milstein, author of The Age-Proof Brain.  During his presentation, Dr. Milstein recounted all the ways we can keep our brains healthy as we get older, just as we can keep our bodies healthy (with their being overlap between these two important goals).  Things like adequate sleep, proper nutrition, consistent exercise, regular social interactions, stress reduction and other variables play a massive role in how sharp our minds stay as we enter our 50s, 60s, 70s and beyond.


To be sure, the brain is the ‘control center’ of our bodies, emotions, etc. – and having a well-developed brain is critical in virtually every area of life.

 

Investing is certainly one of those

 

Unfortunately, marketers and those with alternate agendas are well equipped to prey on certain aspects of our brains that are inherently wired at birth.  For example, due to basic survival instincts (making sure the proverbial – and historically literal – lion does not eat us for lunch), our brain tunes in much more to negative than positive information. 

 

Media like newspapers, newsletters, internet content providers, etc. will often try to tap into negative emotions like fear in order to get you to act (read: buy something from them).  When I first started my career over 20 years ago, clients would send to me newsletters proclaiming the end of the world as we know it with their solutions buried behind a pay wall that only $99 a month would unlock.  These sellers of bad news knew that a certain number of readers would bite at their offering, not out of needs or a well thought out plan, but based purely on short-term emotions (these newsletters, etc. are particularly effective during the occasional bear market).

 

Yes, the world and our lives have challenges for sure, but there are also many positive things that never make the headlines.  When it comes to investing, the fact is that for decades – centuries in fact – a well-diversified portfolio of blue-chip U.S. stocks has gone up on average around 8 or 9 percent per year over long periods of time, regardless of all the bad things – real and perceived (or in some cases manufactured) that occurred. The years and decades to come will invariably be no different. 

 

So, when you are next pitched some way to avoid the forthcoming inevitable doomsday prognostication (people have been predicting the demise of the US dollar due to the government deficit since I first started investing in the 1980s and Reagan was our President), think about the source and their motivations.  Ponder what could go right in your portfolio, and also what real long-term impact the supposed event could really have.  Just a few years ago one of the most extreme events one could even conceive – a pandemic effectively shutting down much of the world’s economy – became a reality.  But a few short years later, the companies comprising the S&P 500 (which is the majority of the US stock market) are making more money than ever, and stock indices are hitting all-time highs. So if a pandemic could not keep US companies from continuing to make money hand over fist, what event that a financial pundit or newsletter publisher or anyone else with an agenda is going to have a real impact on your portfolio a year, two, three years from now (and you should only be invested in stocks for money you don’t need for 3-5+ years)?  Sure, any given company can be adversely affected by particular events, but if you own best of breed companies and a bunch of them at that, then you will very likely achieve your long-term financial/investment goals.

 

One of the most important ways we can keep our brains strong is to reduce stress. The world throws enough real challenges our way; why create ones unnecessarily by listening to people who ultimately want a piece of your hard-earned dollars. By paying any attention to them, it may cost you much more than the price of the so-called advice: it may cost you future stock returns, not to mention your mental and physical health along the way.