Keeping Up With Your Neighbor

We tend to engage in social comparisons when we consider our investments and increase the level of risk in our investment portfolio when we perceive that we are falling behind our peers in our investment performance.

Forget (for a moment) about whether you have the same investment objectives, time horizon or risk tolerance as your neighbor. Remember instead that every investor is “right” at least some of the time1. That doesn’t mean your neighbor is any smarter than your brother-in-law Bob2.


1. Remember the line about a broken clock being accurate twice a day.

2. My reference to “Bob” is fictional. There is no “Bob”, never was a “Bob” and never will be a “Bob.” Ain’t that right – Bob?