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Maybe We’re Trying Too Hard.

Updated: Jan 20

Investors have taught me more about how to think about therapy than I’d like to admit.

Dean Williams, an investor, has an excellent article called “Trying Too Hard” in which he makes the case that a simple investing strategy is the best. Listening to him and other investors, the good ones, the ones who produce market returns, you get the sense that they know how to work with their ignorance and they realize the limits of their knowledge. Because they understand the limits of their knowledge they recommend that most people are best served Passive Investing — buying a tiny bit of every major US company and waiting for at least ten years. Turns out passive investing outperforms 95% of guru investors, analyst, and money managers. The fancy investors you see on TV are trying too hard.

The magic of passive investing is hard for people to really believe. How can waiting beat 95% of market gurus? Everyone thinks, “well, if I could just beat the market once or twice, I’d be set for life.” They don’t realize they’d be better off dead. Literally. I once read a story where dead investors did better than money managers. Why? Because the dead didn’t jump in and out of the market. They were the ultimate passive investors.

Photo by Andre Taissin on Unsplash

The thing is therapy and human psychology, like the field of investing, is not something we understand. Worse yet, the gurus who purport to understand human psychology are unaware of their ignorance. Working in a nebulous and murky area, where even the experts are blind, is something good investors have mastered. That’s why psychotherapists can learn a lot from them.

The Uncomfortable Realization.

Psychotherapy and counseling is still in its infancy. Despite being founded over 140 years ago, we know surprisingly little about how change happens. Sure, we’ve developed newer more sophisticated ideas about human nature since Freud, but we’ve shown little to any improvement in how good we are at helping people change.