Before school I would park myself in front of our family T.V. with a bowl of Fruit Loops or Honeycomb cereal and feast on a heavy dose of Looney Tunes cartoons. I needed my fill of Bugs Bunny, Foghorn Leghorn, Daffy Duck and Yosemite Sam for my day to start off on the right foot.
Bugs Bunny is a smooth operator. He is calm, cool and collected. The only time I remember Buggs Bunny losing his temper was during the show Rebel Rabbit. In Rebel Rabbit, Buggs Bunny was upset the bounty for a rabbit was only 2 cents and he went on a rampage. Despite this one episode he is wise beyond his ears.
In addition to Bugs Bunny, Tweety and Road Runner are composed and sensible. These three characters would make great investors. These three were under constant attack from Daffy Duck, Elmer Fudd, Yosemite Sam, Sylvester or Wile E. Coyote. Regardless of these threats they thought rationally and never lost their composure. As a result, they were able to outsmart their foes.
On the other hand, Daffy Duck, Tasmania Devil, Yosemite Sam and Wile E. Coyote were overly emotional. Their emotions would get the better of them and usually in a dramatic way. To give credit to Daffy, Yosemite and Wile they appeared to start with a pretty good game plan. However, when the plan did not work they reacted with fits of rage and anger.
Sylvester and Foghorn Leghorn were over flowing with confidence and bravado. These two were a little too optimistic in their abilities. Foghorn Leghorn was probably the worst (best?) in his overconfidence. He would constantly be outwitted by Barnyard Dawg and little Henerey Hawk.
What can we learn from these Looney Tunes?
- To be a successful investor think like Bugs, Tweety or the Road Runner. Their peaceful demeanor and silent confidence has treated them well. These three do not get rattled by current events and continue to focus on the task at hand. When you invest, it helps to remain calm despite external pressures. The recent Presidential election is a great example of forces beyond our control. The headline news, angry posts and flurry of tweets caused much worry for investors. However, those who remained calm during the trials and tribulations were rewarded with higher stock prices.
- An investor who is overly emotional like Daffy Duck or Yosemite Sam will have trouble creating long-term wealth. If emotions get the better of you, it would be wise to hire an advisor who can help walk you through the valley during difficult markets. Emotions are usually tied to stock market gyrations so one way to calm your nerves is lower your exposure to the stock market and diversify your holdings across different asset classes.
- Having an overabundance of confidence is normally good. Too much confidence, however, can be a bad thing when it comes to investing. Overconfidence may block your ability to remain flexible during times of market upheaval. It helps to by humble in the market and it’s okay to admit your wrong and cut your losses. Sylvester and Foghorn Leghorn always had to be right and consequently, were usually wrong.
It has been said that life imitates art and watching the Looney Tunes cartoons proves this point.
That’s All Folks! ~ Porky Pig
Bill Parrott is the President and CEO of Parrott Wealth Management. www.parrottwealth.com.
November 17, 2016