Gather round kids, it’s story time. There won’t be snacks, mostly because there isn’t a way to deliver such things over the internet. Amazon is working on it, but there won’t be an accurate computer-to-computer potato chip drone system until 2016 at the earliest, so we’ll have to continue living like savages.
Back when I was in Canada and I actually drove, I hit a hell of a pothole, which ripped a small hole in the side of one of my tires. I took it to the shop hoping for a fix, but it wasn’t happening. I was then informed that I needed two new tires, because one new and one old tire would mess up my alignment. Much cursing and vigorous fist shaking followed.
Fortunately, this auto shop was attached to a Wal-Mart, so I wasn’t stuck paying shop prices for tires. I went in, found the automotive guy, and he told me which tires were in stock in my car’s size. That narrowed down the choice of a dozen or so different tires down to something like four.
I immediately discarded the first set of tires, which were only $39 a piece but looked like they were off a fat bicycle. I hemmed and hawed between the second and third sets, ultimately choosing Firestone tires because I recognized the brand and they were $40 cheaper than the fancy Goodyears.
By the time I was finished I got two tires put on and an oil change for $215, which I thought was civilized. They charged something like $9 for each tire to put them on. Suckers.
Now that we’ve figured out what brand of tires are on my front two wheels, let’s get to the point of this story. Particularly, how investing is like tires. Or milk. Or toothpaste. Or any other boring product, hence the name of the clever title.
I don’t give a crap about tires. I’m sure there are people out there who could tell me what tires are good and what tires are bad, but I don’t care. Tires are the things my car sits on. The only reason I’ll ever care about tires is because I want my car to be able to go vroom, probably to a location where I will be awkwardly unwelcome. Like that time I stayed sober all night long and insisted on giving two friends a ride home who were going to hook up.
Yeah, not my proudest moment there.
(Don’t worry, they avoided me the next time they went out and did consummate the deal. Can’t say I blame them.)
About once every 3-4 years I have a tire problem. Instead of painstakingly researching the best tires for the best price, I do things like go into Wal-Mart and pick tires willy-nilly from the rack. Like I explained earlier, I do this because I don’t care about tires.
Now let’s compare this to investing. In our own little niche of people who either a) write about money or investing or b) care enough about it that we consume pieces of information on it everyday, it’s easy to forget that among our peers who aren’t into money, we are a bunch of weirdos.
Most people look at money the same way that I look at tires. They want to max out their RRSPs and TFSAs so they can retire at a young age, not because they have any interest in asset allocation, rebalancing, or cyclical bull/bear markets. Just like I care about tires so my car can take me places, most people care about money so it can take them places. It’s the result that matters, not the process.
This is one of the reasons mutual funds will never go away, no matter how badly some of you want this to happen. Most people aren’t even interested in opening up a brokerage account and investing their own money, even though it’s simple. They want the easiest solution for their investing problem, and the bank makes sure it’s more than willing to take that money.
I touched on this before, when I ragged on index investing commentators for making the whole damn exercise too complicated. When the majority of the population has a money problem, simple solutions are best, not complex ones. If the guy at Wal-Mart would have spent 10 minutes per tire explaining the ins-and-outs of tire construction, I would have interrupted him after minute two and just had him tell me what to buy.
In that situation, I’d be happy to cede to the guy who knows tires. Just like most people with a money problem will cede to a financial advisor. They just don’t care enough to learn.
Which is why this whole financial literacy stuff is crap. I know countless people who have the basics of personal finance down to a T, yet never bother to learn a damn thing about investing outside of “ETFs good, mutual funds bad.” It almost sounds like the Incredible Hulk giving investment advice.
Is that their fault? Well, kind of, but it’s easily forgiven. They just view investing like I view tires.
There’s a certain blogger who I quite like. This person writes good stuff and has done so for practically an eternity, at least in the fast-moving world of the internet. I asked this person to participate in the stock picking contest a couple years back. The response?
“Thanks, but I don’t know anything about stocks and don’t want to look silly.”
Look mom! I learned tact!
This kind of thing always used to frustrate me. It still does to a degree, but mostly from a perspective of “investing is awesome! Why wouldn’t you care about such a thing?” And then I realized that even people who talk about personal finance several times a week can still view investing as a boring, mundane task. The world of money is exciting to them. The world of investing is something that needs to be done so we can get to the exciting parts. Just like my car needs tires before it can go anywhere.
If personal finance bloggers feel that way, what chance to we have with the common folk?
As much as guys like me think we’re educating people, we’re just preaching to the choir. There’s a reason why none of my friends read this crap, and not just because of the unfunny jokes. They care about finances the minimum amount possible, before returning back to their preferred world of sports and cold beer. Hardly anybody takes money as seriously as we do. Which is why it’s silly to try and pound that information into their heads.
Most people don’t care about investing. They care about where investing will take them. They want their favorite blogger to analyze stocks for them so they don’t have to do the work. They want the results, and not the process. Hell, most aren’t even interested in saving costs on the process. They’ll go to whatever financial advisor suits them, like picking up the first set of tires they see off the shelf.
No matter what we do, or how many words we write, we’re not getting through to somebody like that. Your friends don’t care about investing, and they never will. All guys like me can hope for is to get a job managing their money. They don’t care, and chances are never will. Remember that a lot of the world is on their side, not ours.