Monday July 28, 2014


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Making a big deal out of everything

$mart Money
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††††††††††† Itís the night before the U.S. Presidential election, and Iím tired of people crying wolf every time they see a shadow. For example, lately President Obama has been taking some heat over an 8% unemployment rate.

††††††††††† This is not the first time a Democratic president has been criticised about the number of people out of work. John F. Kennedy took a lot of flack over the unemployment rate 50 years ago.

††††††††††† Guess what the unemployment rate was back then? Yep, 8%.

††††††††††† Thatís right. Far from this being some unknown economic territory, the current U.S. unemployment rate is the pretty much exactly the same as it was 50 years ago.

You want to know what Kennedy called an 8% unemployment rate? 92% employment.

Meanwhile, letís look at what life was like during the Kennedy administration.

Kennedy is remembered for a lot of things. The thing I always think of first when I think of Kennedy is the Cuban Missile Crisis.

In 1962 Kennedy went eyeball to eyeball with Nikita Khrushchev over the establishment of nuclear missile bases in Cuba, 90 miles away from the United States mainland. This would have given Russia the ability to launch a nuclear first strike, and it put every major US city in the continental US with the exception of Seattle within range.

What people sometimes forget is that Kennedy already had Russia blanketed by nuclear threat, from bases in Europe and Turkey, and from the nuclear submarines that could be anywhere at any time. Khrushchev had problems of his own to worry about.

The result was a 13 day game of chicken between two nuclear superpowers, with the backdrop of the Cold War, for the highest stakes imaginable. If anyone blinked the consequence was mutually assured destruction, and the deaths of millions of people.

Nowadays if you try to fly into the United States with a nail file youíll get it confiscated. As far as threats go, it just does not compare.

You want to worry about something? Nuclear annihilation, now thatís something worth getting freaked out about. It puts $4 a gallon gas into perspective, doesnít it?

Back home, Kennedy had to deal with racial tensions that could quickly turn violent. When peaceful civil rights demonstrators, including children, marched in Alabama they were met with fire hoses and trained dogs. It wasnít hooded members of the Klu Klux Klan that squared off with them either. It was policemen and firemen.

James Meredith was the first black student to attend the University of Mississippi. He was not made welcome. But it wasnít some local hot-heads that had a problem. It was the Governor of Mississippi that personally tried blocking Meredithís admittance.

Kennedy had to bring the armed troops to restore peace and order after people died in violent confrontation. These are not troops being shipped offshore to fight foreigners. These are American soldiers brought in to keep Americans from killing other Americans on American soil.

And Meredith wasnít just some high school kid. Heíd already served his country for nine years in the US Air Force. Thatís what race relations was like in the Southern US in the 1960s.

Now think about all of the progress that has been made in the last 50 years.

Are there challenges out there today? Sure. Is an 8% unemployment rate the end of the world? Clearly not.

Yet the financial media and the pundits cry wolf. They cry wolf quite a lot, as a matter of fact.

This is somewhat of a recurring theme in this column; the almost universal tendency of the financial media to report even banal events in over-the-top dramatic fashion.

You can probably tell this already, but Iím not really a writer. Iíve been doing this column for fourteen years, but my degree is in economics, not journalism. So recently I asked one my friends, who is a real journalist, if this sort of thing was taught in journalism school; the same formulaic headlines repeated over and over again, the continual pronouncement that whatever is the crisis of the day as the probable beginning of the end.

Clearly journalists write with purpose, and I was wondering, if this is something that was formally learned. So I asked her whether scaring the crap out of people is something that is actually taught in journalism school. And I was completely serious in the asking of my question.

Separately, another friend Ė this one happens to be in the investment industry- recently shared a story of someone he met that is paying 1.2% annually for financial advice, yet she has no idea how she's doing versus relevant benchmark.

My comment to him was that was the wrong question to be asking. The right question to ask is whether she is going to achieve her objectives. Benchmarks are for pundits, goals are for clients.

His reply was that punditry is still essential. But is it?

Think about this for a moment. If the client reaches her goals in keeping with her risk tolerance, but she trails the ďbenchmarkĒ (whatever that is), did she lose? If benchmark is up 30%, but she is only up 25%, is she sad?

On the other hand, if she beats the ďbenchmarkĒ (again, whatever that means), but she doesn't meet her objectives, did she win? If the benchmark goes down by 30%, but she is only down by 25%, is she happy?

This focus on benchmarks is not only silly, it is potentially dangerous if takes the focus off why a person is investing in first place. Call me thick if you want, but I continue to fail to grasp why we have all these people comparing investment performance to some hypothetical measuring stick that has no direct relation to their own personal success or failure.

Anyway, I guess what I am trying to say is this. Folks, not everything is a big deal. Real life is not like the way it gets portrayed on television. You donít need to get all worked up about every little flight of fancy.

Not all problems are big. Even big problems are surmountable. If you want to achieve your goals then get yourself a good plan, stick to the plan, and donít get distracted by people crying wolf every time they see a shadow.

The opinions expressed are those of Brad Brain, CFP, R.F.P. CLU, CH.F.C., FCSI.† Brad Brain is a Senior Financial Advisor with Manulife Securities Incorporated, in Fort St John, BC. Manulife Securities Incorporated is a Member of the Canadian Investor Protection Fund. Brad Brain can be reached at†or

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