InvestorGeeks

(This article orginally appeared on ThinkingAboutMoney on July 5th, 2006.)

One of my basic assumptions with regards to planning for the future (whether it is financial planning, or career planning, or other) is that we are in a period of disruptive change (which I’ve been calling the “Information Revolution” - as a way of indicating it is analogous to the Industrial Revolution”).

Periods of gradual change are relatively easy to deal with. Individuals can extrapolate and plan based on the past. Words of wisdom from parents and elders more or less make sense.

Disruptive change adds discontinuities to trend lines. Suddenly what worked in the past does not work anymore. Common knowledge is incorrect. What was good advice can suddenly become very bad advice.

Today a friend asked whether we were too old - a sort of generic question, but an interesting one. For example: I know some senior citizens who simply cannot cope with the change they have already experienced. I know people in their 40’s who are already very stressed about the change they are experiencing. And I know people in their 20’s who are just getting a sense of the pace of change, and teenagers who are completely oblivious to it.

I think age absolutely has an impact on how one copes with change, and that curiously enough, different ages have both advantages and disadvantages in the way they cope.

Teens and those in their 20’s have two main advantages. First, they have grown up with today’s technology. Their baseline (or starting point) is more advanced. In many cases they have a better gut awareness of current trends. Second, they have grown up with and are accustomed to a higher rate of change. Their ability to multitask (working, while watching TV, browsing the net, and engaging in a dozen simultaneous IM conversations) is well developed - arguably an advantage in today’s world (but only arguably so - some would say they have lost out on the ability to focus and perform in-depth analysis).

Their disadvantage is that they do not yet really understand change. In their minds real estate always goes up, the stock market will pretty much always rise, and interest rates will always be fairly low.

Older folks have almost diametrically opposite problems. Multitasking is much less common, and technology adoption much lower (I got a real kick out of Donald Trump bragging in his book “Think like a Billionaire” that he doesn’t use computers or handle his own Email). Also, our very experience can work against us in periods of rapid change, where our knowledge of what worked in the past (that younger folks lack) leads us in the wrong direction.

At the same time, we have an advantage that we have experienced huge change. We know that real estate can drop in value, that stock markets go down and stay down for long periods, and that interest rates can reach absurd heights.

These differences suggest strategies for both groups.

Younger people can be well served by looking back at history, not in order to forecast what is coming, but in order to realize that they are basing their judgment on a very narrow period in history.

Older folk must be careful to question their experience and knowledge of history. To try to look at trends with a clear mind an unbiased viewpoint.

Above all, every individual should strive to cultivate contacts of ages other than their own. A younger person who disregards older people as “has beens” is just as stupid as an older person who disregards those younger as “inexperienced” or “ignorant”. By working together and listening and learning from each other, individuals in both groups can dramatically improve their chances of navigating the revolutionary changes that are ongoing.

Dan Appleman is a veteran author and entrepreneur who is currently writing on investment and personal finance issues as a form of self-imposed homework under the principle that the best way to learn is to teach. Read more of Dan's work at ThinkingAboutMoney.com.