I Have Two Questions For You…

13 May 2015

We have been hosting our radio show “The Premier Investments of Iowa Financial Hour” for over 6 years now. Recently, I was having a conversation with a retiree and was asked, “What was the very first question you ever got on your radio show?”  I did not have to think very long. I remember the conversation well.

Our timing to start the show may not have been the best (or maybe it was?) in that it was the week of March 9, 2009. At that time, the markets had just been pummeled, confidence was low, and it seemed every day some huge company was going under. Depending on how you look at it, it was a very stressful time.
The caller was in his 40s and told me that his 401(k) was getting hammered. They were going to pull out of the market completely and wanted to know my opinion. As I paused to answer, I could only imagine all the listeners just waiting to hear me answer this one!  Most people were probably thinking, “Everything is so bad we must get out; he has to agree, right?” Wrong.

My answer was very simple, yet reflective of our philosophies at Premier Investments of Iowa. I asked the caller two questions. First, “WHEN do you plan on getting back in because you are only in your 40s?”  His quick response was, “Well, I am going to wait until the market COMES BACK UP to get back in.”  My second question to him was, “WHY would you ever get back in when you’ve demonstrated to me you don’t know how this works?”
At that moment, he could clearly understand the impact of his answer. He just admitted he was going to sell low and then buy high, just as we were taught never to do. The markets were not the problem. My job at that point was to make him understand that very often we are the real impediment to financial success. Even when we know right from wrong, the emotions of greed and fear can be overwhelming.
I have often said that I cannot be a predictor of the markets, but I can surely predict how people react when the markets do what they do. I have not spoken to that caller since, but I often think that my answer to that emotional question may have provided some guidance to whomever was listening that day.

Good Luck!! Jeff

Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Premier Investments of Iowa, Inc. are not affiliated.


Jeffrey Johnston

Jeff has over 30 years of experience in the investment industry. He currently holds his FINRA Serices 6, 63, 66, 7, 24 & 51 licenses with LPL Financial as well as his health and life insurance licenses.