If you had gone into hibernation or stasis on January 1 and just woke up, you might think that the market didn’t do a thing all year! What? Yes, the S&P 500 was 2743.15 on January 1 and closed at 2726.22 yesterday (11/12/18).
You would have missed the melt up in January, correction in February, concerns about a trade war and mid-term elections and all the volatility of October. PLUS, the 600 point drop yesterday.
It would have been blissful, right? RIGHT!!
I am not immune to emotions nor concerns about uncertainty. But I have learned, through experience that keeping the right perspective can have significant financial benefits. The following three perspectives help me in times like this:
- The media’s job is to get us to tune in, not to make good decisions. Headlines and news stories are simply the means to the end.
- Short term performance is not an indicator of the wisdom or success of a long-term strategy. Short term performance is simply the result of variability in asset prices which we can’t control.
- We don’t fall short of financial goals by following a disciplined investment strategy. Actually, deviating from the strategy may increase likelihood of not reaching goals.
If you are increasingly concerned, don’t watch (hibernation might be an option for those in a cold climate). Let me know if you'd like to have a conversation.
All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful. Indices are unmanaged and cannot be invested into directly. Past performance is not indicative of future results.