Herd Mentality

^{The Weekly Habit}

^{Last week we conducted a poll on the “State of the Economy.” An overwhelming majority voted “Fair” (53.3%) or “Good” (33.3%). Our audience is predominately high earning millennials.}

Financial behavior is an interesting pyschological concept. There are many different behaviors, but one sticks out from the pack.

Ever heard of “herd mentality?”

Essentially, it’s FOMO.

At Habits, we realize that the availability of information creates a heavy fear of missing out on a constant basis.

There is too much noise across 24/7 news cycles, rise & fall of Bitcoin, unstable geopolitics, social media, monetary policy (e.g interest rates), you name it.

However, there is a way to avoid the noise.

J.P. Morgan’s Asset Management group recently shared their quilt chart of annual asset class returns for the past 15 years. It has everything from U.S. Large Cap (think Ford or Google) to Bonds.

Starting from the left you see annual returns from each year leading up to 2023.

Cutting through the noise you’ll see that their hypothetical diversified portfolio (60% stocks / 40% bonds) provided a range of consistent returns.

In other words, diversification is the answer to FOMO.

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Key Takeaway from our CEO, Jack Boudreau

If you’re not an expert on investing, find a financial advisor.

A 33 year old’s portfolio should look a lot differently than someone with their eyes set on retirement.