A couple of years ago, I arranged to purchase an eight-week old beagle for my wife's birthday. She named him Wally. Actually, she named him Wally about four decades ago when she first dreamed of having a beagle named Wally. Once Wally got his land legs, I soon found him doing the thing all dogs do. For no apparent reason, he would chase his tail. Everyone in the family thought it was so cute. Incredibly naïve, but cute.
Believe it or not, people who study these things call it "dog compulsive behavior." This is similar to the human "obsessive compulsive behavior." If we're to believe a recent study, one of the primary examples of obsessive compulsive behavior in humans is their uncanny ability to consistently chase investment performance (see, "Why 401k Investors Chase Performance – and How to Prevent It," FiduciaryNews.com, March 5).
We can attribute this unhelpful behavior to a couple of reasons. First, quite simply, there's greed. Despite all the plaintive warnings required by the SEC, too many investors – including ERISA plan sponsors – genuinely believe past performance guarantees future performance. How else do you explain all those sophisticates taken in by Madoff?
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Christopher Carosa
Chris Carosa has been writing a weekly article and monthly column for BenefitsPRO online and BenefitsPRO Magazine since 2011 and is a nationally recognized award-winning writer, researcher and speaker. He’s written seven books, including From Cradle to Retire: The Child IRA; Hey! What’s My Number? – How to Increase the Odds You Will Retire in Comfort; A Pizza The Action: Everything I Ever Learned About Business I Learned By Working in a Pizza Stand at the Erie County Fair; and the widely acclaimed 401(k) Fiduciary Solutions. Carosa is also Chief Contributing Editor of the authoritative trade journal FiduciaryNews.com and publisher of the Mendon-Honeoye Falls-Lima Sentinel, a weekly community newspaper he founded in 1989. Currently serving as President of the National Society of Newspaper Columnists and with more than 1,000 articles published in various publications, he appears regularly in the national media. A “parallel” entrepreneur, he actively runs a handful of businesses, including a small boutique investment adviser, providing hands-on experience for his writing. A trained astrophysicist, he also holds an MBA and has been designated a Certified Trust and Financial Advisor. Share your thoughts and story ideas with him through Facebook (https://www.facebook.com/christophercarosa/)and Twitter (https://twitter.com/ChrisCarosa).
