Change vs. Nostalgia

Peter Katevatis - Mar 10, 2015
How often do you hear the following comments: “Things are not as good as they were in the good ol’ days!” “Look to the future, don’t look backwards.” Human nature is to cling to our past, and often to dwell on it.  We look fondly on the great mo

How often do you hear the following comments:

“Things are not as good as they were in the good ol’ days!”

“Look to the future, don’t look backwards.”

 

Human nature is to cling to our past, and often to dwell on it.  We look fondly on the great moments of our youth and somehow totally disregard (erase from our memories) all the negative or insignificant details of our past.  We conversely also try and ignore the past and focus on the present and future.

 

My opinion is that you must find balance between these two juxtaposing views.  The past shapes our character and our experiences (good and bad) should be celebrated.  However, we must understand and embrace the fact that the past is just that… behind you.

Katevatis Wealth Management - Your partner in change

 

I find more clients get trapped looking backwards than looking too far forward.  They stick with what worked in the past and not change for the current conditions.  Now I’m not talking about chasing new technology and selling all your mining companies. No, I’m focusing on individuals that continue to invest in a level that is too risky when they should be scaling risk back.  We tend to get comfortable in our niche and experiences but that doesn't mean we should stay there.

 

Your job will change, your home will change, your body will change, your needs will change.  Your investment plan should be stable but also have the ability to evolve with you.  The key to making changes takes two steps:

 

One, identify your present position and needs.  Two, do something about it.

 

The first step is the hardest. It makes us uncomfortable to tally all our wants and needs and reconcile them with what we currently have. But in order to stop looking back and start moving forward, you need to stop procrastinating and identify your present position and needs.

 

The second step is where investors freeze and tend to do nothing.  Usually this involves admitting past mistakes, and no one likes to admit they are wrong.  Secondly, being blind to your present situation can jeopardize your future.  I highly encourage you to reach out to an experienced financial professional to help you.  This second opinion is not just a different way of looking at things, it is imperative to minimize our biases.

 

The past is important to remember, especially in the world of investing.  Interest rate trends, charting of equities and indices, and earnings releases are all backward looking yet crucial to a quality plan.  The famous line is “History doesn’t repeat itself but it often rhymes.”

 

Change is evolution not revolution so make sure you identify if you are evolving the right way.