Renée C. Gage
When in doubt, zoom out. This saying is crucial for investing. Throughout history, there have been countless market pullbacks. These market pullbacks, though tough, are minor when viewed in the long term. Those who stuck with a disciplined investment strategy and ran a marathon, not a sprint, have typically seen their investment accounts grow.
Let’s talk about the 24-hour news cycle. Daily headlines are meant to get clicks, stir the pot, and strike a chord with our emotions. There is a focus on what happened yesterday and what is happening today. The financial media shows us daily and weekly charts, and the market swings can be pretty volatile some days. These daily market swings can lead to impulsive decisions we later regret. For example, the Dow's 1,000-point drop on August 5th caused panic but is likely insignificant for long-term investors.
This chart illustrates how our emotional and mental state can shift if we closely monitor the financial markets and check our investment account balances daily. We can move from a feeling of pure bliss to feeling defeated in a short amount of time. Many people may have felt this way during early August this year. While we cannot predict the future, what happened in August will likely have a nominal impact on long-term investors. To put this in perspective, the following excerpt is from First Trust’s “Markets In Perspective” slide deck,
“Volatility is not a recent phenomenon. Each year, there is the potential for the market to experience a significant correction, which for the S&P 500 has averaged approximately 14% since 1980. History has shown that those who chose to stay the course were rewarded for their patience more often than not.”
In conclusion, a solid financial plan, disciplined investing, and patience through market ups and downs will often enhance financial peace of mind. I will close with a quote from one of my favorite personal finance books that would be worth your time if you have not yet read it:
"Doing well with money isn't necessarily about what you know. It's about how you behave. And behavior is hard to teach, even to really smart people." - Morgan Housel (The Psychology of Money).
If you have questions and would like to learn more about working together, schedule a quick call with me here, and let's see if we're a good fit!
About Johnny Garstka
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Disclosure: Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services are separate from and are not offered through Commonwealth Financial Network. Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. All indices are unmanaged and investors cannot invest directly into an index. The Harvey Group & Alexandria Living Magazine are separate and unaffiliated entities.
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