logical fallacies

Where Risk-Mitigation Misses Its Mark

photo shows an arrow in the center of a bullseye

Did you catch any of the Olympics? With so many stunning performances, we’ve got competition on the brain. The human mind is a funny thing, though: sometimes we’re so keen on not losing, we don’t notice when we’re getting in the way of our own wins.

We don’t want to risk wasting our chance. It happens to people when it comes to investment decisions, too. The Financial Times recently put it this way:

“Think of your life like an archer releasing just one single arrow at a target. Naturally, you want to make your one shot at life a good one—to hit your bullseye—and this is why you mitigate your risks: to improve your precision (or the tightness of the grouping of your potential arrows) as well as your accuracy (or the closeness of that potential grouping to your bullseye).”

Let’s break that down. We very much want to hit that bullseye, so we will do what we can to get rid of the wild shots: through practice and experience, we realize they are the most painful and obvious problems, right?

The Times continues, however, that we often end up “improving precision (removing our bad potential arrows) at the expense of accuracy.” When we control for a more limited, consistent potential performance, we may be sacrificing our proximity to the target.

The price of so-called safety is often hidden and certainly too high. Mitigation tools can omit “the great shots that could have been” for the sake of reducing “the bad shots.”

To a degree, it’s understandable: the bad shots can be so noticeable, of course reasonable people want to avoid them! Those missed shots, on the other hand, will never be as obvious, so who’s to say they hurt that much?

But long-term investors do know the costs. A few opportunities here and there, over a long stretch, can add up.

And we want to help you work what you’ve got.

Clients, need to talk about the shots we’re taking? Write or call, anytime.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.

Investing involves risk including loss of principal.

No strategy assures success or protects against loss.


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The Surprising Benefits of Hanging Out in the Gray

photo shows a black pencil on a white background next to a white pencil on a black background

In psychology, “black-and-white thinking” is a defense mechanism that helps the brain cope by pushing things to their extremes. If there is a crisp division between “right” and “wrong,” things are easier, yeah? It’s not so overwhelming to decide how to behave if we can boil a situation down to two basic options. 

Like a lot of fairytales, it sure does sound nice on the surface. 

But so few things in life are truly black-and-white, all-or-nothing, either/or. The problem with “black-and-white thinking” is that it’s almost always a logical fallacy.  

And a logical fallacy is just that: it is false, illogical. You can‘t reason with a fallacy. You reject it and find a frame that suits the situation better. 

So why do people avoid hanging out in all that gray between black and white? Because gray is blurry. There are way more decisions to make when we navigate the gray. 

I’m sorry to say it, but life is already mostly in the gray in-between. And it is no time for us to splinter into camps when we all could stay on the same team. Nebraskans are suffering tremendously as COVID-19 continues to move through our communities and swamp our hospitals and care systems. 

What if we didn’t splinter in the face of such challenges? It is easier to hang out in the gray when we accept that we are here together. The extremes get lonely: we’d rather face reality and work through it with each other. 

Across the coming years, we will learn more about the science of this pandemic and the damage it will continue to inflict even on those who survive. In the meantime, we don’t need things to be totally “black-and-white” to move in the right direction.  

Stay safe enough. 

Avoid unnecessary risks. 

Use our resources as wisely as we can

What do we stand to gain when we hang out in this blurry space? We get share each other’s strength in this tough time. We get to hold out some hope for the road ahead, the other side. 

Clients, we’re grateful to get to work with you, even in this tough time. Have questions about your own options? Let’s talk. 


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