If you’re invested in the stock market right now, like it or not, you’re casting “votes” in its campaign for growth or decline. More money in the market equates directly to more votes for the market. Your participation in the market is a vote of confidence in the market’s ability to generate a fair return. Your lack of participation is the opposite: If you don’t believe the market will grow (and choose to leave your money out), you’re automatically voting accordingly.
As I write this, the Dow is down 1.5% for the day. Today, it seems, people are voting against the market’s growth. I don’t enjoy seeing that and neither do you, but we all know it happens, it’s part of the deal. It’s just one day, and reward follows risk. Right?
What are investors’ votes really saying, as they vote down the market? One headline I see says: “Stocks selling off as global jitters grip the market.” Another headline says “’Beijing put’ may be driving China’s stock market fever.” May be? Is it or isn’t it? And what jitters, specifically, are gripping the market? Do these headlines help us see what investors are saying, or are they just meant to rile us up? It seems to me that a headline should be supported by real facts, and not just hearsay and guesswork.
You know that headlines don’t make for a reason to buy or sell your investments, but we’re all susceptible to the lure of the fear-based hyperbole. Headlines matter to our collective psyche, whether we care to admit it or not. After all, without the danger of lions and massive food shortages threatening us, what do our brains have to be afraid of, if not the possible decline of our investment accounts?
Now, the question before us is this: What can you do to reduce the anxiety that inevitably comes from witnessing other investors apparently casting their votes in favor of a market decline?
First, I suggest you see the headlines for what they are: guesses. Nobody can accurately predict the behavior of millions of independent investors. The ‘experts’ claim to know, but they hedge their guesses with words like ‘may’ and ‘could.’ They speak in vagaries so as to not look a fool when proven wrong. Once you choose to see things a bit more rationally, consider the long-term trend of the market and whether you want to remain a participant in that trend.
Second, I strongly recommend you brace yourself for a bumpy ride in the markets for a while. I cannot promise any short-term market predications that you should necessarily take to the bank. What I can do is remind you to determine the amount of risk with which you’re comfortable. Too much risk is bad. Too little risk can be bad as well. Like Goldilocks, just right is where we want to be.
Third, I recommend that you have a conversation with us concerning the methods with which your investments are managed to reduce any unnecessary fees, while taking full advantage of available efficiencies in the way your accounts are organized. If we haven’t already discussed this with you, please contact us to learn more. If markets are going to be bumpy and possibly offer lower returns than in past years, then we’d better be ready and take appropriate actions.
Controlling the controllable with your investments is all you can do. Getting clear on what the controllables are is a big part of the success formula. We’re here to help you do that. Until then, read the headlines with a healthy dose of skepticism and consider if it’s likely that the world’s economy is going to shrink forever or whether there’s some reward in store for the patient investor who chooses fact over fear.
Adam Cufr, RICP®
P.S. Remember all of the horrible headlines in 2008 and 2009? Have your investment accounts grown since then? Whatever the reason for the growth, your patience has been rewarded. Reward a friend too, by telling them about our Discovery Sessions. See below. Thanks!
You may have heard that we’re beginning to offer something called Discovery Sessions. What is a Discovery Session? Well, I’m glad you asked. It is a free 60-minute experience designed to help people learn the tools, strategies, and methods necessary for building a detailed blueprint to allow them to balance both financial and lifestyle goals alike.
Designed for people new to Fourth Dimension, attending one of these no-obligation sessions gives them the opportunity to learn, for themselves, what they want their retirement to look like and the options to consider when designing their plan. It’s a really thought-provoking process and we would love it if you were to introduce the session to friends who may be considering their retirement options.
There are a number of ways to RSVP. Call us at (419) 931-0704 or email: Dave@FourthDimensionFinancial.com.
If you’d like a ready-prepared email to send to friends, email us and we’ll send it your way.
Thanks so much for your help in alerting others to the options available to them. It means so much to us and them when you make a connection.