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If you’ve never been to Disneyland (southern California) or Disney World (Florida) I would encourage you to visit them at least once. They truly are magical places where once you step inside the gates, the outside world seems to disapear as you become surrounded by perfectly manicured hedges, zero trash or graffiti and colorful parades and shows.
Thats the the good part of the Disneyland effect.
By making sure everything we see and hear in the theme parks are neat, clean, colorful and cheerful Disney helps us believe in the song,
“zippidy do da, zippidy day…my oh my what a wonderful day!”
Having this kind of positive outlook and optimism are great traits for investors (why else would you being investing in stocks or funds unless you thought they would go up in value) but it can also be hurtful to you if the economy that exists outside of what you are seeing and hearing is headed in a different direction.
The reverse is also true.
If what you are seeing and hearing is all bad news and you invest accordingly, your results could also suffer if the economy was actually doing better than you were lead to believe.
I try to avoid being lulled into theDisneyland Effect by reading and listening to a variety of sources. If all I’m reading are articles from stock fund managers there’s a good chance their conclusions will be now is, was, and always will be a good to buy stocks.
What about you?
Have you ever found yourself investing one way due to the Disneyland Effect when the economy actually turned out to be very different?
