If you’re not familiar with the lingo, maximizer and satisficer are words coined by Barry Schwartz (a top rated TED talk lecturer and author of The Paradox of Choice).
Maximizers have a high bar when it comes to making decisions. They need to cover all the bases. If you are a maximizer, you bring intensity and commitment to making the best decision.
Satisficers have a much lower bar: “good enough.” For instance, I need something pretty to wear to a neighborhood get together. Macy’s petite department should have something I like. Thirty minutes later I’m good to go.
However, “good enough” is a grey area. I find a new pair of yoga pants at Marshall’s very quickly like a true satisficer. But, if I’m having a dinner party…I pour over my many cookbooks like a regular maximizer looking for a menu that is “good-enough.”
As in any context, investors can be maximizers, satisficers and/or new-fangled hybrids. Either way, navigating a portfolio can be slippery terrain.
Within a few months of its formation twenty years ago, our stock club decided we’d never invest in tobacco or weapon/war related companies. Similarly the divestment – reinvestment movement’s mission is to purge portfolios large and small of investments associated with fossil fuel production/distribution and to enrich portfolios with investments associated with clean energy.
Most investors start off putting their money in stocks, bonds or mutual funds which are intended to increase their financial well-being. Soon enough they discover their “risk-taking comfort zone”: conservative…mildly aggressive…aggressive.
In time they find ways to choose stocks. So years ago, when all of us came to the club straight from work, wearing “Chico’s,” it was a no brainer to invest in our favorite clothing chain, in keeping with the long-standing investment motto “buy what you know.” We evolved though, favoring investments with significant potential to grow. Thankfully, we bought Apple early and often!
Divestment-reinvestment plays out differently for maximizers, satisficers and hybrids:
- The Clean Energy Maximizer/Big Profit Satisficer has many funds to choose from, not being concerned about maximum return on investment.
- The Big Profit Maximizer/Clean Energy Satisficer may have to explore a good number of clean energy options until they find something “good enough.”
- The Clean Energy Satisficer/Big Profit Satisficer does not need lots of options, just a few good enough to meet their expectations for reasonable returns and impact on the environment.
- As for the Clean Energy Maximizer/Big Profit Maximizer, my old friend Barry Schwartz says “good luck, there isn’t a lot out there.”
I disagree. We’re forming connections with savvy experts who will have solid suggestions for the hard to please “double maximizers.” I would suggest focusing on reinvestment in clean energy as the first priority. Divestment for the double maximizer will likely involve some unwelcome booby-traps and rabbit holes.
We will rely on the maximizer/satisficer lingo when we delve into the confusing topography of mutual funds where the devil is deep in the details. Shades of Green will supply resources and specifics that shine a light on many of them.