Walt Kelly’s comic strip character, Pogo the Possum, was years ahead of financial academia and the industry when he noted how people irrationally behave, ”We have met the enemy, and he is us.” Johnathan Clements’ new book, “How to Think about Money,” lists almost two dozen ways we (and that includes him and me) shortchange ourselves. Pogo speaks with a South Georgia dialect while Clements has a precise British twang. Two different paths lead to the same shore.

Focusing too much on the short-term practically assures failure. Saving for a distant target like retirement is arduous when spending money today provides instant gratification.

You do not live at Lake Woebegone; we are all not better than average. Study after study shows the typical investor, whether they use an advisor or not, underperforms the broad stock market. Teams of MBAs rigorously analyze stocks. Plan for the same amount of work or hope for luck.

Daniel Kahneman and Amos Tversky worked together for decades on a vast array of subjects, one being how framing influences the human decision-making process. We see the exact data, but its presentation changes our reaction. For example, people save more in 401K plans when having to opt out versus choosing to enroll. Michael Lewis details their work in a fascinating book, “The Undoing Project.”

Easily recalled information influences how we make decisions. Pretty much everyone knows about Warren Buffett so they attempt to emulate him. In Berkshire Hathaway’s annual report, most of their investments are taking individual companies private not stock picking. Berkshire Hathaway has more income from “float” (premiums received but not paid out as claims) than investment revenue from equities and bonds.

Instead of focusing on a portfolio’s overall performance, we fret over individual performance. Someone once remarked, “If everything in your portfolio is going up, you are not diversified.” Segregating assets is a type of “mental accounting.” Another example is we readily spend dividend and interest income but are reluctant to use principal or capital gains. In response, retirees often take more risk than necessary because this mindset leads to chasing higher-yield investments.

Risk tolerances are not stable. When markets rise, investors put more in stocks and reverse the process during downturns. Risk tolerance, risk capacity and the need to take risk are entirely different and have to be evaluated with your goals and time horizon.

The future is not predictable. Scott Cole, a CFP who practices in Birmingham, wrote that people WANT to hear “guaranteed, certainly and precisely,” but people NEED to understand “it depends, I do not know, and we will see.” As part of our reptilian brain, we look for patterns where none exists, and we cannot help it.

You can’t always get what you want, but Buz Livingston, CFP can help figure out what you need. For specific recommendations, visit livingstonfinancial.net or come by the office in Redfish Village, 2050 Scenic 30A, M-1 Suite 230.