HUMILITY GOOD FOR INVESTORS

I love a good thunderstorm. The power of nature is beautifully inspiring and extremely humbling. Humans can feel a bit arrogant until nature reminds us that we puny little creatures are completely dependent on greater things for our survival.  A little humility goes a long way toward achieving a successful outcome here.
        
There are few times when I feel more in awe of nature, and my nothingness compared to it, than when in an airplane. Flying is an amazing experience that can come to a sudden and tragic end if a pilot fails to give proper respect to the forces of nature.
 
Last weekend we flew to Dallas. Planning such a trip begins weeks in advance with a careful review of the developing weather patterns. As a very moist system had moved in to much of the southern half of the country, I was paying particular attention to the pattern of thunderstorms that were building each day along my route. When the day for the trip arrived I had determined that the storms would be prevalent, but avoidable, so at first light Saturday morning we departed.
 
As anticipated, my entire route was covered in a front with cloud tops around 15,000 feet, but since I was flying at 27,000 feet, we were soon on top enjoying the sunny side of the clouds. But thunderstorms can reach up tens of thousands of feet and even the biggest airliners cannot top them. Given their enormous amount of energy, the only safe place to be when there are thunderstorms around is far away. But here is the secret. In my position above the cloud deck I could easily see hundreds of miles in all directions, making the isolated towering storms both easily visible and simple to avoid.
 
As we flew, we listened to some of the smaller planes talking to traffic control, planes not capable of getting above the cloud deck, and thus unable to see the way ahead. These pilots were at risk of flying into their worst nightmare, an embedded thunderstorm. I marveled with Launa both at how dangerous the storms were, as well as how easy they were to avoid when you had the proper viewpoint.
 
As investors we are also on a journey fraught with both beauty and danger with survival dependent on our starting with a fair amount of humility. Arrogance in flying or investing rarely ends well. Add to that humility a 27,000-foot view, as it were. In investing as with flying, humility and a good vantage point generally come from experience. An increasing risk to investors is the ever growing distance since the last economic thunderstorm. Too many investors and advisors have either forgotten the danger, or were too young to have experienced it. Flying below the clouds they are essentially unaware or unconcerned about the embedded thunderstorms that may lie ahead.
 
In future columns I will address some of the economic thunderstorms that may be developing along our flight path.