The Conservative Investor Paradox

Many people with significant stock holdings in 2008/2009 lost 50% or more of their money. Many of these people maintained higher lifestyles than they could afford and worked in jobs dependent on a growth economy. It might be you, your neighbor, your cousin, but “they” is a big part of the population.

It’s the comeuppance that the conservative millionaire-next-door has foreseen coming for years. The only ones “least affected” are the most conservative. If that’s the case, are they going to seek out the buying opportunities out there? Generally no. Why? Because being truly conservative with money is a behavior that is a derivative of a psychological core. People’s core psychology (their programming) doesn’t change based on an environmental change. They stand to make money the same “old fashioned” way they always have, but they aren’t going to seek out aggressive investment strategies based on a down market scenario.

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