So, you’ve decided that you are going to purchase a new vehicle and you’ve narrowed your focus down to one particular make and model. You’ve even determined the color along with all the bells and whistles you’d like on this new gem. Then, you can’t help but notice your desired automobile everywhere – on the freeway, driveways in your neighborhood, the parking garage at work, etc. It “feels” like now that you’ve concluded your target buy that there has been a dramatic increase this week in the prevalence of this particular vehicle.
You wonder… Did your neighbors go through the same process you are experiencing and just beat you to the punch at the car dealership? Is your community just one step ahead of you regarding this dramatic increase in your dream car? The answer is no. You are experiencing the Baader-Meinhof phenomenon (or frequency illusion). Your increased awareness is leading to a cognitive bias that this particular thing is more prevalent. One of those weird tricks our brains can play on us.
Let me take this one step further, what is your actual fear? That you will lose your job? That you will outlive your nest egg? Again, the answer here could be different for all of us, but peeling back the layers is important. I’ve had many conversations recently where I have seen the fear of recession paralyze individuals from being able to design and execute aspects of their financial plan. The “what-if” enemy has people absolutely frozen in their tracks. By identifying and calling out your fear specifically you can measure and address this concern in your planning.
Today, I thought it would be both appropriate and interesting to zoom in on some contrarian indicators. These are measuring sticks or alerts that may encourage us to stray from the herd.
Links mentioned in this episode:
Trevor is a Partner, Director of our Private Wealth Advisor Group, and Author of Thoughts on Money.
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