Hakuna Matata your way in 2019

The Swahili phrase means “no worries”, and that’s exactly how one should aim to be, especially since 2019 has just begun. It’s a new year, a new start. Don’t be bogged down by financial worries from yester-year.

Let’s learn from Pumbaa of the Lion King.

Pumbaa the warthog is a loving and open-hearted character. In the Lion King, Timon and Pumbaa first come across Simba who’s fainted in the desert when he’s cast out from his pride. Finding out Simba is a lion, Timon asks Pumbaa to run, but Pumbaa refused.

“It’s just a little lion… Can we keep him?” asks Pumbaa.

“Lions eat guys like us,” says Timon in horror.

“But he’s so little!” Pumbaa argues.

“And he’s going to get bigger,” Timon counters.

“Then he’ll be on our side,” Pumbaa says, convincing Timon. And thus the duo became a trio.

Takeaway:

This story might be short, but it does teach us one thing: how to overcome anchoring bias, which we might show when making investment decisions. Anchoring bias is the resorting to preconceived opinions when encountering someone or something new.

It is natural for Timon and Pumbaa to be afraid of lions, so Timon’s wanting to have nothing to do with Simba is understandable. But Pumbaa thought differently.

It might be naivety on his part, to think that Simba (being young and small) would not be able to hurt them, but it also showed that Pumbaa was forward looking, thinking of the benefit Simba would bring them when he was bigger.

In a way, Timon is much like a typical beginner investor — or any investor really. It’s hard to dispel our preconceived notions, and often we’re too afraid to try something out of our comfort zone. But have a look at the bigger picture. Break anchoring biases by viewing through an objective lens like Pumbaa did.

What could you really gain? It might be more than what you expected.

At Eastspring Investments, our investment teams try to take advantage of investment opportunities that result from investors’ behavioural biases. You can find out more about www.eastspring.com