Trends for 2017: Technology, Passive Investing, and the Immutability of Human Nature

Looking into 2017, I have seen a number of people cite investing trends. This is unsurprising.

Trends are by nature trendy.

Two of the most oft-cited are the rises in 1) Technology in the form of "robo" platforms to guide investors, and 2) A "passive investing" approach.

Both are becoming more prominent and each has merit.

Technology provides convenience and control. The guidance provided in online "robo" platforms tends to be sound, employing worthwhile techniques such as asset allocation, rebalancing, and tax harvesting.

Passive investing - seeking not to outrun "the market", but merely hitch a ride on it - has likewise proven to be a highly effective long term strategy.

But there's a catch. Actually there's a "catch 22"; technology makes people less passive.

The same technology that increases information and access is the same technology that increases the need for instant gratification and our ability to get some.

Tons of information + instant gratification = bad investing. (TMI + PDQ = WTF)

As worthwhile at these trends are, the missing piece – and the reason we started MarketPsych Insights, is that all investing ultimately gets filtered through the complex and unique psychology of individuals with varying goals, strengths, weaknesses and personalities. When investing goes wrong, it is almost always because these factors were not addressed, not because the plan was bad.

As we look forward at the trends toward financial technology and passive investing in 2017, let's take a look back to 2016. A *Real Life Investor was kind enough to share his investing diary with us here at MarketPsych Insights. His writings illuminate the all-too-typical difficulties investors have in capitalizing on these trends.

Periodically, with his permission, we will publish excerpts as part of feature we call, Diary of a Modern Investor.

*made up