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Trends versus Data Points

Author Scott Boyles

Have you ever used one single data point to make a big decision?  I feel like this happens quite a bit when it comes to investments.  Reactions are fascinating based on a number being released that is a picture at a point of time, which just happens to be looking backward. I’m of the belief that focusing on the trend is much more important and believe this is true for anything in life.

I don’t want to go into the details here, but when our daughter was born a few months ago, my wife suffered complications after birth requiring significant medical attention. They pumped her full of “things and stuff”, Doctor quote, hoping to stop what was happening.  They ran testing every couple of hours for the next few days to see if it worked. In speaking with the Doctor, he summarized if you look at each result individually, it would be tragic. Looking at the trend though, my wife was responding positively to the treatment. Today, I have a healthy wife and daughter.

Following the trend is a much more reliable indicator rather than a data point. Focusing on the trend is going to give you better outcomes than reacting to the picture of time. You can take this in almost anything you are working towards. If you are trying to get out of debt, is it getting smaller or larger over a few paychecks? Are you getting healthier after a few workouts, not just the single time you booked an appointment with the trainer?  Is your business growing?  Is your investment account growing?  

Investments are a long-term strategy for a long-term plan.  Making short term decisions based on a short-term number is going to leave you short of your desired outcome.  If you leave your strategy alone and do what we call zoom out after a period of time, you’ll like the data point you have in the long term.