Herd Mentality: Proven Through A Game of Kick Ball

Photo courtesy of Steven Depolo on Flickr

Photo courtesy of Steven Depolo on Flickr

While driving by an elementary school a few months ago, an unexpected observation quickly spiraled into a business lesson. 

It was a game of kickball taking place during an ordinary recess for the school kids. As I drove by, a young boy kicked the ball into the outfield. Quickly, three kids ran to the ball from the infield, competing for the ball. 

Who could get there the fastest? That is physiologically interesting all on its own, but what stuck out to me the most was the fourth student. At the moment when everyone else ran to the outfield, this kid ran to second base, raised his hand for the ball and kept the kicker from advancing to second. 

At that moment I realized how important it is for us to slow down the game of investing. As financial advisors with a fiduciary responsibility, we cannot get lost in the game of chasing returns. Our job is to stay focused, think ahead, and avoid the rat race of chasing returns. 

What is more important for our clients is risk management, i.e. our own little way of keeping the runner off second.