INVESTING II-FOLLOW GOD’S DIRECTIVES NOT HUMAN TENDENCIES

Human tendency is to respond to what is happening in the financial markets or news from the media. Good news frequently provides confidence or triggers greed, which tempts us to buy; bad news makes us feel uncomfortable or fearful, which results in a desire to sell. Generally, good news causes the market to go up, and bad news causes the market to go down. Therefore, if you follow the normal human tendency, which is to rely on your emotions in making investment decisions, it means that you will buy high and sell low. This, of course, is the opposite of what you want to do, and it is not consistent with God’s investment principles.

First, our trust should be in God, not in any particular investment or money manager

Have no fear of sudden disaster or of the ruin that overtakes the wicked, for the LORD will be your confidence and will keep your foot from being snared. (Proverbs 3:25–26, emphasis added)
In regard to greed, Jesus warns us, “Watch out! Be on your guard against all kinds of greed; a man’s life does not consist in the abundance of his possessions” (Luke 12:15). If you struggle with greed, I suggest that you pray and ask God to change your heart (Proverbs 21:1). Also be sure to give generously to God’s work, because giving generally helps a believer deal with greed.

In response to bad news, God’s directive for the righteous man is this: “He will have no fear of bad news; his heart is steadfast, trusting in the LORD” (Psalm 112:7).

Therefore, when you hear bad news from the media, or if the markets have decreased significantly in value, I recommend that before you make any investment decisions, you spend quality time with the Lord in prayer, seeking his direction and his wisdom. Only God knows the future, and only God is in control.
“I am God, and there is no other; I am God, and there is none like me. I make known the end from the beginning, from ancient times, what is still to come. I say: My purpose will stand, and I will do all that I please. From the east I summon a bird of prey; from a far-off land, a man to fulfill my purpose. What I have said, that will I bring about; what I have planned, that will I do.” (Isaiah 46:9–11, emphasis added)

Another human tendency is to make investment decisions on impulse, or in response to “hot tips” or “once-in-a-lifetime opportunity.” On the other hand, the directive in Scripture is toward planning, diligence, and patience. Proverbs 21:5 states, “The plans of the diligent lead to profit as surely as haste leads to poverty.” Hasty investment decisions usually lead to losses.

Once a year, I spend several hours in prayer, seeking God’s wisdom (James 1:5) and direction (Psalm 32:8) for the investments he has entrusted to me. I develop a biblically based investment strategy, including percentage asset allocations to each category, i.e., bonds, Canadian equities, global equities, etc. (See my two Financial Moments on diversification.) On a quarterly basis, I prayerfully review the portfolio, and as long as God gives me his peace, I will generally sell assets that have increased in value and purchase assets in categories that have decreased in value. This forces me to “sell high and buy low” and to avoid responding to market conditions, “hot tips,” and media news. Between these “reviews,” I generally ignore the media and the markets.

In summary, follow God’s directives (prayer, planning, and patience), not human tendencies such as fear and greed. “Commit to the Lord whatever you do, and your plans will succeed. “ (Proverbs 16:3)

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