I am going to admit something that the world tells me that I should not…the market is scary right now.

I am not immune to what is happening.  I see it and feel it just like everyone else does.  I don’t like watching my own investment accounts go down, but I hate watching the investment accounts of our clients decline. It does not feel good.

I can’t get on here or Twitter and blatantly ignore what is happening.  It feels disingenuous and condescending the way that many financial professionals talk down to us.  As if they are Spock operating on pure logic and I am some dumb human tied to my emotions. It feels like my account drops every single day so forgive me for not being excited about the buying opportunity at the moment.  All those financial professionals talking down to me and you, don’t let them lie to you, they’re scared too.

So what am I going to do?  Absolutely nothing, because there is nothing that I can do.  

I am a long-term investor in my 30’s and if my goal is meaningful growth, then fear is the price of admission.  In a time like this I feel the fear in my bones just like you do. I hear the voice in my head (or on TV) that says this time is different.  Maybe it is, but probably not. I feel confident not to act, most of the time, but when that thought creeps in…here is what I do:

I turn off the news

  • This may be my single best antidote during times like these.  There may have been a time in the past when the news was meant to inform and protect the public.  Those were the days. Today, it is a money making operation just like any other business. They make money by getting eyeballs on screens and clicks on ads.  In order to do that, headlines are sensationalized. They bait you into clicking. Don’t fall for it. It is financial pornography. Turn it off.

I remind myself…Time is on my side

  • The Rolling Stones told me it was, and in terms of investing, it truly is.  Let’s take IVV, a popular S&P 500 index ETF, for the last 15 years through 3/9/2020.  Notable in the last 15 years is the 2008 debacle, Brexit, a sizable market correction in 2018, and this chaos happening right now that has dropped 18% of market value in two weeks.  The 15 year return is still 7.77%. More than enough return to get where I’m trying to go.
  • If I get really cynical, I like to remind myself there are a grand total of zero 15-year stretches that have had negative returns, zero
  • Even when I’m 60, I’ll still be reminding myself of the same thing.  I don’t stop investing at retirement, it’s a checkpoint and not a finish line.  I still need investment growth to fund the second half of my glory year

I remind myself…I can’t time the market 

  • It is so easy to say to yourself, this is bananas right now so I’ll just get out of the market…I’ll come back in when things are better.  It sounds so appealing, I can spare myself the anxiety of watching it fall. Bu when is it better? Is it after one strong day of market gains? A week or a month?  When the person on TV says so? Unfortunately, I don’t know and neither does anyone else
  • Fun fact #1 – The 20 year return for the S&P 500 through 2018 is 5.62%.  All it takes is missing the best 20 days to push that return negative, to -0.33%.  Imagine thinking I knew what the best 20 days would be out of 20 years…wild thought
  • Fun fact #2 – Assume a person held a 80% stock and 20% bond from 1973-2018.  The worst one year return of that period was from March ‘08 to February ‘09, a loss of 42.6%.  The best one year return was 63.8%…from March ‘09 to February ‘10. The best one year return directly followed the worst one year return.  It only seems obvious in hindsight, imagine trying to time that in the middle of it…another wild thought

I remind myself…this is normal AND necessary 

  • Investing involves risk.  Successful investing involves embracing that risk.  At the risk of sounding like a fortune cookie, there is no reward without risk.  I must be willing to endure temporary loss in order to achieve meaningful gain. These are the rules and we have to play by them

I remind myself…stick to the plan

  • I rebalance my portfolio, systematically and not based on emotion.  It doesn’t always feel great to buy stocks and sell bonds when the world is in chaos.  It’s what I said I would do when I was thinking clearly though. It’s the only right thing to do, so I stick to the plan

Sometimes the best action is inaction.  It takes courage and bravery not to act when the whole world is screaming at you to do something, anything.  Be brave and stand strong.

In life and investing, fortune favors the brave.

Leave a Reply