While most of you likely have a fairly negative impression of rats, they have many redeeming qualities that could benefit you if you can overcome centuries of negative press coverage sensationalizing their shortcomings.
Just last week a heroic rat was memorialized globally for his efforts to save lives. According to this article, Magawa was an African Pouched rat that was lived in Cambodia. He found 71 land mines and 38 items of unexploded ordnance over his career, earning him a gold medal. A true hero.
Why use a rat for this task instead of humans with technology? The rats are better and faster.
- Rats compensate for their horrible eyesight with a tremendous sense of smell. They can focus on smelling explosives instead of wasting time digging up every piece of metal in the ground. Apparently Magawa could clear an area in 30 minutes that would take a human deminer four days.
- Rats are light enough they will not trigger the mines, so they can step confidently without fear of explosion.
- Rats are smart. Their skills can be honed with proper motivation, but they are also maximizers that adjust their behavior to achieve optimal outcomes most of the time.
- Rats can be motivated. In this case, it appears Magawa was motivated by bananas.
Human investors would benefit from emulating a rat’s approach to minefields:
- Be motivated. We suggest using your family’s long-term goals instead of bananas.
- Be smart, but don’t outthink yourself. Humans have a natural tendency to see coincidental patterns and conclude that immediate action is necessary. Buy low(er) and sell high(er) with a disciplined rebalancing process.
- Be confident, trusting in your long-term plans instead of short-term market direction.
- Be efficient. Our greatest blessing is time. Allocate it to the people and causes where you can make a difference instead of investment minutia. We can help you there.
As 2022 ebbs and flows with successes and challenges, bears and bulls, and highs and lows, keeping a rat’s perspective to make the most of every day could be just the strategy you need.
Quote of the week: Russell Investments: “Psychologists hypothesized that rats choose a more optimal strategy because they have no desire to be precisely correct. Instead, the animals accept they’re going to be wrong some percentage of the time and simply want to minimize their error. Humans, on the other hand, aspire to be perfectly correct and, as a result, we’re wrong a higher proportion of the time.”
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Any opinions are those of IAG and not necessarily those of LPL Financial. Expressions of opinion are as of this date and are subject to change without notice. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. No strategy assures success or protects against loss. Investing involves risk including loss of principal.