This week a computer glitch at another national firm resulted in an incorrectly low price on a largely held investment. The first reaction by many could have been to panic. I asked my office to get on the phone and do some old fashioned research before jumping to any decisions. We determined the price change was without merit and so we waited patiently until the word came back that it was a computer error. Afterwards we talked about how simple computer errors like this could be disastrous to investors if they have become wholly dependent on computers.
I recently completed my annually required flight training. With modern technology, flying an airplane is not particular difficult after you get the hang of it, consequently much of our training centers around what to do when the computers fail.
My flight instructor had me put on a hood to prevent me from seeing outside the airplane, then he initiated a full electrical failure. I had no instruments left except a compass, an attitude indicator and an altimeter. Then he told me to land at the Albuquerque airport. I had no way of knowing where I was or where I was going, and I was having to maintain the plane in steady flight without all my wonderful technology. I was able to land safely by having Air Traffic Control give me carefull verbal instructions to the end of the runway while tracking me on radar.
Investors have almost unlimited tools today. The apps with their allocation algorithms seem to be endless. Many investors and even advisors have subsequently turned much of their decision making over to technology. This has been a wonderful benefit to investors just as so-called glass panels have been great for pilots. But if investors are no longer able to make decisions without these tools, then I feel they are just as much at risk as a pilot who cannot fly without a computer.
I had a grandpa who was a very successful investor. He had a book of stocks that was mailed to him every month and most of his research was done with that little book. Every time I visited he would pull out that book and we would talk about different companies and how to value them. He died before computers and cell phones yet he was better at investing than most people I know today.
Every pilot knows that technology sometimes fails. It fails in the investing world as well. Being unprepared to take over when it fails, or being unable to determine if it is working correctly in the first place, puts an investor at risk.
Many investment accounts are becoming automated. If you are not staying current in your personal investing skills, computer glitches like the one that happened this week could wreak havoc on your portfolio. Like a good pilot, always be prepared, or make sure you have an advisor who is prepared, to take over lest a computer crash result in a personal crash that could be much worse.
Hi, I'm Dan. I'm a CFP® Professional.
Securities and advisory services offered through Commonwealth Financial Network®.
Member www.finra.org / www.sipc.org , a Registered Investment Advisor. Wyson Financial, 1173 S. 250 W. Suite 505, St. George, UT 84770.
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