Farrell Behavior

The 2008 financial crisis and the Great Recession were unsettling. People lost jobs, homes, and a good chunk of their nest eggs. The S&P 500 saw an almost 40% drop in 2008 alone.

The 24-hour news cycle and social media offered up plenty of data, advice, and stories of sheer panic. And the messengers we listened to likely affected our reaction to the market’s decline—as well as our longer-term financial prospects.

I started thinking about how the likes of John Bogle and Jonathan Clements helped me develop a thick skin for market gyrations and the things we can’t control.

They were calm, thoughtful mentors whose writing helped me take a long view in times of uncertainty. This perspective enabled me to remain in the market and to continue contributing to it as it crashed, reaping gains over the years to come.

Writing about behavioral economics for MarketWatch.com, Paul B. Farrell brought a very different style to the table during and after 2008. He rambled. He pontificated. He raged against the machine and seemed mad as hell, like Peter Finch’s Howard Beale in the movie “Network.”

Farrell’s colorful MarketWatch headlines included “‘Good News’ About Living in Peace on a Dying Planet” and “Frankenstein Capitalism is Sucking the Life from America’s Soul.”

The casual reader might see an over-the-top permabear warning of impending doom. Someone worth reading more for spectacle than for helpful financial wisdom. Indeed, some reader comments questioned his sanity and if his articles even belonged on a financial website.

From my side of the computer screen, I suspected there was method in Mr. Farrell’s seeming madness. This same prophet of gloom would also sneak in a perfectly thoughtful column about simple, well-diversified “lazy portfolios” or an all-index approach.

I don’t know for sure, but I suspect he was drawing a line between what we can’t rationally control (Wall Street elites) and what we can (our own behaviors). This is where his message becomes helpful.

If we stop trying to outmaneuver all market threats, we might be less likely to time the market, err on the side of trading, and lose money in the process.

Despite the bluster, then, Farrell was leading his readers to much the same place that Bogle and Clements were. Know yourself. Build an automated plan. Keep it low cost and well diversified. Leave it be. Find peace. Now those are wise thoughts to keep in mind as the market sits near its all-time high.