I read a very interesting blog post the other day. In it, there is a Warren Buffett quote that makes so much sense: “The most important quality to do well is temperament which would permit the control of fear and greed which have ruined many. Anyone who has become rich twice is dumb. Why would you risk what you need and have for what you don’t need?”
Both the quote, and the blog post where I read it, made me think about the recent election in the U.S. and all the commotion it caused. The worrying, wondering and speculating over who would win and what the potential
fallout might be. The worrying, wondering and speculating about how the markets could react, would react and how best to protect oneself.
The truth is, no one knows. No one ever knows. Not really; and as proof I offer this: After an initial panic in global markets right after Donald Trump won, the Dow soared an unprecedented 257 points — a result that was not predicted, not expected and came as a total surprise.
So why would you take chances? Why would you take unnecessary risks trying to out-think, out-smart the market? Like Mr. Buffett said, “Why would you risk what you need and have for what you don’t need?” When really what we need is a process, a financial plan to stick – all the time, but especially in uncertain, unpredictable and volatile times.
On the topic of “rolling the dice,” I can’t help but think of Donald Trump and the many successes and failures he’s had over the course of his career. The fact is, he’s not alone. The history books are littered with those who have won and lost fortunes, who have taken risks they didn’t have to take, taken risks they shouldn’t have taken only because they wanted more – even though they already had more than enough.
What I don’t understand is why we’re impressed with that. Warren Buffett says it best: “If you are already rich, there is no upside to taking on a lot more risk, but there is disgrace on the downside.
Alan Friedman is an Investment Advisor with CIBC Wood Gundy in Toronto. The views of Alan Friedman do not necessarily reflect those of CIBC World Markets Inc. CIBC Wood Gundy is a division of CIBC World Markets Inc., a subsidiary of CIBC and a Member of the Canadian Investor Protection Fund and Investment Industry Regulatory Organization of Canada. If you are currently a CIBC Wood Gundy client, please contact your Investment Advisor.