Are You a High Flying Investor?

​I saw an interesting story in the news of a pilot who hit some power lines with his small airplane. The accompanying picture showed the plane dangling upside down from the lines, while a fire department ladder truck rescued the pilot. I could only imagine how he must have felt as he hung there waiting for help while onlookers gawked and took photos for their social media pages.
My first reaction to the story was to question why the guy was flying so low. The top altitude of my airplane is 27,000 feet and I regularly use every one of those feet to stay as high as possible. There is nothing that tall in the United States so I am confident I won’t hit anything, at least nothing attached to the ground.  During the portion of flight when I am climbing and descending, I follow prescribed procedures that guarantee I won’t run into any obstacles. There are risks to flying so I try to eliminate as many of them as possible by making good decisions before I take off. I am reminded of the NTSB’s aviation accident report a few years ago that started out with the sentence, “If pilots would stop buzzing farm animals we could greatly reduce our accident rate.” It was meant to add a little humor, but it pointed out that the price for enjoying “low and slow” flight, is an increased level of risk. Each pilot must find their own comfort level.
Investing contains risk. There are some risks that cannot be completely avoided, but others that investors regularly bring upon themselves, much like a pilot cruising near power lines. I was going to list some of the riskier investment practices but then I thought of a few phrases I have heard from investors hundreds of times. Phrases like, “Dan, I know this may sound dumb but I would like to …” Or maybe, “I know you are going to laugh but I took some money and…”  or “You will probably think this was a bad idea but I went to a free dinner seminar and bought…” Each of these statements are worded in a way that indicates the person already knows what the answer is going to be. Like a low flying pilot, investors are often already aware that what they are doing, or thinking about doing, is increasing their risk.
The holiday season is a time of reflection and of planning for the coming year. As you consider your investing practices ask yourself, “Am I buzzing farm animals at 50 feet, or am I cruising along as high as possible, having one less risk to worry about?” My advice is to fly high whenever you can, and leave low-altitude risk taking for those activities that are not as critical as saving for your retirement. Whether it be in investing, flying or life in general, flying high above the obstacles is always a good idea.