“I’ve been shaking all night long, but my hands are steady”
     - from ‘Three Pistols’ by the Tragically Hip

David and I have been doing presentations over the last few weeks and we’ve talked about the notion of a ‘steady hand’. The company name came from the belief that for all the good things we can do for clients (good managers, well designed portfolios, fair fees, appropriate service), the most important one is providing a steady hand. We need to help clients stay on track with their long-term plan, keep cool when markets are overheated and take action when markets are weak. And importantly, not flinch when they need us.

Investing is not rocket science, but emotions and peer pressure sometimes get in the way of making sound decisions. Indeed, the psychology of investing is the hardest part. Most of the time, investing is pretty mundane, but at market extremes, it’s anything but.

In James Montier’s book, ‘Value Investing – Tools and Techniques for Intelligent Investment’, he talks about the empathy gap. “When we are in a cold, rational frame of mind we say we will behave in one fashion; when we are smack bang in the middle of a situation with our blood pumping, our previous plans are thrown out of the window.” Mr. Montier suggests that, “we aren’t good at predicting how we will feel in the future.”

So, I ask you the same question we asked our audiences. Who is your steady hand? Is it you? If not, is it your partner? Your Mom? Your investment manager or advisor?

You should know who or where the steadiness is going to come from when you’ve been shaking all night.

(Note: thanks to John DeGoey for the Hip quote.)