On our recent vacation, my wife and I visited a nature preserve off the coast of Argentina where we had the chance to swim with sea lions.
Even though they were half-grown pups, some of the sea lions were as big as I was. They were curious, friendly, and playful. Like many mammals, their play takes the form of gently nipping at each other. They seemed happy to include human visitors in their fun and games. We could reach out and touch them, and they would respond.
One pup in particular kept nipping at my ankles, my swim fins, and even my snorkeling mask. Every time I touched him, he would reach around and bite at my hand. We played this game several times, and I kept touching different parts of him with no concern for my safety. Then, about the sixth time he had my hand in his mouth, I took a closer look. It occurred to me that my hand was in the jaws of a predatory wild creature with very big teeth. It seemed like the right time to end the game.
My wife, busy documenting my behavior with the camera, thought I was totally nuts to let the sea lion nip my hand a second time, much less a fifth and sixth. Ordinarily, I would have agreed with her. Just one bite at my texting fingers by a carnivorous critter nearly my own size, and I would have been swimming for the boat.
The reason I didn’t make a mad dash for safety was that I had been told what to expect. Before we got into the water, our tour guides explained what the sea lion pups were likely to do. They told us this was how the pups played. They reassured us that we wouldn’t be in any danger.
Since I trusted the guides and believed what they told me, I was able to relax and enjoy the experience. Without knowing what to expect, I may have been frightened out of the water at the first contact with the sea lions. Or I may have chosen to stay out of the water altogether, thereby missing out on a delightful opportunity.
In case anyone is wondering, no, I haven’t suddenly switched from writing a financial column to writing a nature column. This story has a clear application to investing.
Diving into the cold waters of investing can be scary. If you don’t know what to expect, you might be frightened off the first time you get a statement that shows your investment has lost value. Or you might make two of the worst possible investing mistakes, which are selling out when markets are plunging or being too intimidated to invest your money at all.
When you’re prepared and know what to expect, you understand that all markets—stocks, bonds, real estate, commodities, or any other asset classes—will have scary downturns. In the world of investing, ups and downs in the market are normal, just as playful nips are normal in the world of sea lions.
With many financial websites offering basic information on investment terms and how to start investing, you can do a lot to educate yourself before you invest a penny. Before you place your trust in any advisor, ask questions. Insist on explanations of any terms you don’t understand. Find out about commissions and fees, especially from anyone selling financial products.
What you need before you jump into the financial sea is knowledge. Knowing what to expect helps you swim comfortably with the sea lions instead of fearing that you’re being thrown to the sharks.
