The game show "Who Wants to Be a Millionaire" was designed to increase contestant pressure as the show progressed. As the prize money climbs, the lights narrow to the contestant, and the heartbeat sound effects are more pronounced. The pressure is on and the stakes are higher.
Game shows have been on television for nearly 90 years, and they have always been built this way. "The Price Is Right," the longest-running game show in U.S. history, fills the studio with noise and shouting while Bob Barker gets the contestant to price a dishwasher. The banker on "Deal or No Deal" conveys his offer through Howie Mandel with ominous music and family members yelling just off set. Game shows are designed in a way that contestants experience added pressure as they navigate the game.
Decision making on a game show is meant to be exhilarating, but decision making is also an everyday encounter. Decisions range from the mundane, such as what to wear or which brand of cereal to buy, to the genuinely consequential. Professionals such as doctors and pilots make decisions with significant consequences all day long. These people are trained with years of residency, recurrent training, and checklists. Game show contestants get the opposite. They are dropped into an environment they have never experienced before, with real money on the line, and asked to decide in thirty seconds.
Investing has similarities and differences to a game show. The two are similar in that investment decisions are consequential: Not all investors are trained, and whether you realize it or not, distractions abound. The differences are even more significant. Investing has greater odds of success than winning the million-dollar prize, and you can choose to remove the distractions that a contestant must work around. The distractions of the stock market may not seem obvious, but they exist. Daily price moves can alter our mood and opinions. As can “experts” on TV, confident voices on social media, and the stock tip from your next-door neighbor.
The accomplished investor Warren Buffett once described successful investing. “The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.” In other words, make decisions based on a strategy and not the exuberance or doldrums within the stock market.
Game shows intentionally compress time and raise pressure in an attempt to alter temperament. Investing works best under the reverse conditions. This seems obvious, but it’s not always practiced. Time is your friend with investing, and pressure and distractions should be at a minimum.
The practical version is simple. Find an investment strategy that is intuitive and have the temperament to stay with it through the good markets and the difficult ones. Our investment strategy at Syverson Strege is centered on broad diversification across large and small companies, with an emphasis on businesses that are attractively priced and have high levels of profitability.
Whether you realize it or not, distractions abound when it comes to investing. The most successful investors shield themselves from the daily noise of the stock market.
Investing doesn’t have to feel like a game show. With the right strategy and a trusted partner, you can tune out the distractions and make decisions with greater confidence. If you’re ready for a more thoughtful approach to investing, let’s start a conversation.
