By DAVID MOON, Moon Capital Management
A recent study reported in
the Annals of Internal Medicine reports that two glasses of wine per day
increases your risk of colon cancer by more than 20 percent. I am sure
plenty of folks seized on this news and used it as justification to prove some
premeditated conclusion, causing all sorts of worry and paranoia among moderate
drinkers who previously thought their imbibing carried some cardiovascular
News stories about the study
did not report that the odds of getting colon cancer among teetotalers were 0.94
per hundred people. Among drinkers, the risk increased to 1.13 per hundred
people. There's your 21 percent increase.
Perhaps a statistician could
explain why that increase is statically significant, but it should have no
bearing on whether a person worries about getting colon cancer. According
to this study, your odds are about 1 percent, regardless of your alcohol
We have become a society of
worriers. And we worry about the things that are least likely to impact
our lives. It's as if we have some innate need to fret.
When Alan Greenspan
testified before the Senate Banking Committee on April 21, the news was that the
Fed was no longer concerned about deflation; inflation and increased interest
rates were now more likely than before. The stock market dropped in
reaction. Less than a week later, a Wall Street Journal headline
proclaimed that subsiding inflation worries were responsible for a big positive
day on Wall Street.
If investor sentiment can
change that quickly, why were people worried about inflation to start
with? So what if the Fed increases the couple of very short-term interest
rates over which it has direct control? Rates are still lower than most
people would have ever imagined only ten years ago. The fear of an
increase in the Fed funds rate from 1.00 to 1.25 percent doesn't impact most
people, yet that was the big story among market pundits for a week. The
guys on CNBC needed something to worry about.
The problem is our
fascination with both instant gratification and depression. We want easy
and quick answers to things, even if the answers are wrong. Do you want to
cut your risk of a heart attack? Drink two glasses of red wine a
day. Simple. Want to ward off colon cancer? Cut all alcohol
from your diet. Simple. Useless, but fast and simple. We want
easy answers to inherently complicated issues, and as a result, we lose focus on
the few really important decisions we make in our portfolios - and our
Most people who amass large
investment portfolios can contribute their wealth accumulation to one or two
factors. The two most common reasons people accumulate money are steadily
saving and the outstanding performance of a handful of stocks in their
portfolio. Seldom does someone accumulate significant wealth by focusing
on daily rumors and worry points. So what if Alan Greenspan sneezes?
Does that really do anything to the value of General Electric?
Don't sweat the small
David Moon is president of Moon Capital Management, a
Knoxville-based investment management firm. This article
originally appeared in the News Sentinel (Knoxville, TN).