Can investing risk also be an illusion? – St. George Daily Spectrum

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My family enjoys theme parks and one of our favorite rides is the roller coaster.

Coasters come in various sizes and intensity levels but they all have one concept in common. They push the limits of excitement to the point the rider has a sense of imminent danger, but the danger is merely an illusion.

In 1976, my dad took us to the king of roller coasters, Six Flags Magic Mountain, to ride the newly opened — Revolution. Revolution was the first modern coaster to perform a vertical loop and the ride did not disappoint. We kids screamed the first time we experienced inverted coaster riding and ran as fast as we could to get back in line to ride it again.

Years later in 2002 I took my own kids to Six Flags to be some of the first to ride the newest extreme coaster — X. This coaster was light years ahead of Revolution in many ways, but its main feature was the placement of the cars to the sides of the track, giving the rider the feeling of being suspended in mid-air. This also allowed the seats to rotate 360 degrees, creating sensations coaster enthusiasts had never before experienced.

X began by climbing the first hill backwards, then as the seat rotated to face you straight towards the ground, it dropped 200 feet. Just before the apparent impact the seat would rotate allowing all the G forces to be absorbed while on your back. The sensation was like nothing we had ever experienced, and the thrill met all expectations.

As the ride ended, the kids and I, having just “faced death” and lived to tell about it, ran to get in line again.

The commonality among coasters is the perception of risk. Last week, I discussed how safety in investing is largely an illusion but risk in investing can be an illusion as well. Like a great coaster that creates the impression you are about to plunge to your death, investors increasingly face the same false sensations in investing.

In our media driven world we are continually barraged with disasters. Foreign countries threaten to annihilate us. Terrorism strategically raises its ugly head to inspire fear. Politicians and pundits act as if Washington is on the brink of chaos. Cyber-attacks make people afraid to turn on their home computers.

There is a colloquialism that says 95 percent of our worries never come to pass. I don’t know how statistically accurate that is but it seems to be a pretty good description of investors. From my experience the vast majority of news that frightens investors ends up being much more fizzle than sizzle. One need only look back over the years at all the disasters, real and imagined, our nation has faced and realize that we have survived them all, and thrived. Risk truly can also be an illusion.

There is much we can learn about life from a great coaster. Perhaps we should start by worrying less and spending more time enjoying the ride.

Dan Wyson, CFP, is author of the book “21 Financial Myths” and owner of Wyson Financial. 1173 S. 250 West No. 505 St. George, 84770 — 435-986-9525 – Securities and Advisory services offered through Commonwealth Financial Network, member FINRA/SIPC, a registered investment advisor.

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