Burying Your Head In The Sand Works For Some Investors, But It's Not The Best Advice

History tells us the stock market usually goes up regardless of which party occupies the White House. It also shows that the market usually quickly looks past geopolitical shocks like the start of a war. Similarly, the market has always adjusted to economic turmoil sparked by the emergence of paradigm-shifting technologies. As a result, it’s somewhat popular to say that people should ignore jarring headlines in the context of their investment portfolios.

On that matter, here’s what Joe Weisenthal asked me on Bloomberg’s Odd Lots podcast during a panel discussion about the AI’s threat to the economy as we know it: Per the theme of your Substack — generally speaking, stocks go up — is the sub-theme to just ignore everyone else on the stage? Because you’re just going to get distracted, and you’re going to get freaked out, and whatever. …Ignore all the Odd Lots episodes, ignore all the news, ignore the doomers. Because in the end, the only thing that can happen if you pay attention to the news is you do something stupid.

Then you missed the long run. Check this episode of Odd Lots on Spotify, Apple Podcasts, or Bloomberg! His question cuts to advice that some investors have found helpful. The "bury your head in the sand" playbook can be the right one for those without the intestinal fortitude to hold on to their investments when the pressure is on.

Forget your retirement account passwords and ignore the news, and in a couple of years, you’ll hopefully have made progress toward your financial goals. But for most people, I think this approach is a mistake. Here’s how I answered Joe’s question (edited for clarity, emphasis added): I’m actually the complete opposite of that. Like I said before, I’m always worried.

And this is sort of the message I try to communicate out to the world. I do a lot of things that are kind of counterintuitive. Like, I do check my 401(k) plan every single day. A lot of advisors and professionals will go on TV and say to forget your 401(k) password, or ignore politics, or ignore what’s going on in Iran.

We have a long history of getting past all this stuff. I think that’s all incredibly silly. I think you really do have to think about how bad things are at a given time. That way, you build up those memories so that, 10 years from now, when there is another war, you will remember how bad things were in the past.

And you’ll know how markets evolved out of all that stuff. To ignore things makes you more vulnerable to making mistakes. So yeah, be really conscious where there are [AI-related] job losses, and where there will be industries that fall apart. Because all the lessons you learn today from all the bad things that happen — when you lose your job, and when your neighbors lose their job — and then a couple years from now, maybe the market’s higher.

You know, 10 years from now, it’s going to happen all over again, and you’re more robust when that stuff happens. So, I think it’s a complete mistake to ignore terrible things that are going on — as someone who’s optimistic in the long run. Ignoring or forgetting unpleasant events might come with mental health benefits in the short run. But in the long run, I think it does more harm than good.

Because it could mean putting off a valuable lesson, which could have better prepared you for a similar event in the future. Keep your thoughts organized 💭 Having a thorough bank of detailed memories, especially the bad ones, helps to better contextualize events causing anxiety today. You may be thrown off if you don’t remember the last time the media fed you live shots of an escalating war, gave increased airtime to the doom mongers, or sent you frequent push alerts about 1,000-point drops in the Dow. Because when events are new to you, you’ll rightfully feel uncertain because in your mind, there’s no precedent for what comes next.

Consider this passage from the final post I wrote for Business Insider, back in February 2016, which I’ve repeated for TKer subscribers before: Every major sell-off in history has been accompanied by a mix of economic concerns, monetary policy shifts, geopolitical tensions, or some other source of consternation that might make a rational person demand a higher premium for putting their capital at risk. The details are different each time. But structurally, it’s generally the same story: it’s risky out there. Amid all this, one pattern has stood the test of time: stocks will go down a lot, but then they’ll go up a lot more.

Sounds familiar, right? Now, this may sound callous — and I’m speaking strictly from the perspective of investing — but the goal is to become a little less sensitive to bad news that you’ve seen before. To be clear, this doesn’t mean not caring about serious issues. We are human, and bad news affects us and the people we love.

In the context of politics and social issues, I think people should certainly be engaged and express their concerns and views. This is another reason why I think people shouldn’t ignore what’s going on in the world. But in the context of investing, you wanna be like that wise grandparent who’s seen a lot and can match or one-up you every time you mention something difficult going on in your life. Not only are they often sanguine when others are panicking, but they’re also better equipped to identify those moments where things might actually be different this time.

The challenge is organizing your thoughts so you can be mindful of the world around you while thinking as objectively as possible about your finances, minimizing the risk of making emotionally driven mistakes. For more on organizing your thoughts, read: 4 different ways of looking at the exact same economy 🪖👒🎩🧢 The past is often worse than you remember For me, it’s not enough to be present in the moment. I spend a lot of time looking back at past crises and market crashes. I have lots of old notes and printouts I thumb through.

I’m always eager to read research and