Airlines, Passengers, Investing,
Behavior Matters
by: Brendan Magee

United Airlines, American Airlines, passengers being dragged off of flights, and flight crews looking like bouncers in a bar fight is all over the news these days.Traveling by air is looking more and more like W.W.E. Wrestling, and I am starting to rethink the flight I booked in June.

In the aftermath, you have chief executives holding press conferences defending their airlines policies for removing passengers off of flights. You also have passengers defending their own policies where they have purchased the ticket on the plane and have the right to the seat they paid for. Then we have lawyers cashing in on the situation. 

I am going to make the case that all the drama and millions of dollars in lawsuits could have been avoided with better behavior on behalf the airline and the passengers. If the airline knew in advance the flight was overbooked they could have made the announcement and given out the vouchers for a passenger to give up their seat long before everyone was in their seats. Once in the the seat the passenger just wants to get where they are going. They may also be dealing with a little anxiety or fear about flying. The airline's behavior in the future could be more considerate of their customer. 

The passenger also doesn't need to treat the flight attendant with rage and hostility. I can't imagine the flight attendant wants to be in the position where they are asking/demanding passengers get off the plane. Screaming at the flight attendant or becoming physical isn't going to defuse the situation. Behavior that is more considerate of the other person would go a long way to helping.

For a smoother ride, investors also need to be more focused on their behavior. I recently had a conversation with a prospective client and we were discussing the rules of successful investing. As far as diversification was concerned, he didn't believe in it. He said the only place to make money in the market was by owning small cap stocks. 

I tried to point out to him that yes in recent memory small cap stocks had had some good returns, but there were some years where small cap stocks had lost 38% and that there was even a period in time where small cap stocks had lost over 50%. I tried to point out to him that if his portfolio took a 50% drop he would need a 100% return just to get back to even. The gentleman disagreed and said that he was going to keep his money in small cap stocks. 

Now I am no fortune teller and I cannot see into the future, but I think it is pretty reasonable to think that at some point every kind of stock out there will experience a pretty dramatic downturn. The year 2008 isn't that long ago to forget that. 

Not that I am wishing this on the man, but I imagine if he continues to defy the laws of investing and he ignores the benefits of investing, this man's portfolio will take a pretty big hit at some point. At that point I imagine he will believe that he has a portfolio or investing problem. 

The reality is that he does not have an investing problem, he has a behavior problem that has had a negative impact on his investments. At that point if all he does is move his money to different investments and he doesn't take the time to uncover and own his flawed behavior, the problem will persist. Until he gets that, the problem is him, much needed transformation will not begin to take place. 

Bottom line is whether it's airlines, health, or investing, behavior matters.

Brendan Magee is the founder and president of Inevitable Wealth Coaching. With questions, comments or suggestions, e-mail brendan@coachgee.com or call 610-446-4322