Correction or Panic? (part 2)

Warning: What you are about to read may be hard to stomach, offensive and 100% in your best interest …

After the stock market’s precipitous fall last week, I am sure many investors are now starting to panic even though they know this too will pass. While I am never a fan of the most recent fades or trends, I do think there is something to this ‘behavior finance’ thing. Cliché in my opinion, there is merit in this overly used term. I need not look any further than last week for proof that emotion trumps all when volatility spikes or the markets trend downward. All economic fundamentals go out the window as soon as emotion takes hold. Investing is not like parachuting in which a delay pulling the ripcord results in an almost 100% fatal mistake. In contrast, with investing, waiting it out and delaying any rapid moves is the better course of action. Having patience, realizing our experience is not unique and keeping a long-term focus will put things in perspective when the sky is falling. 

Those that can truly weather the storm generally come out the other side in a much better condition. While I do wish there was something I could do to protect my clients from these turbulent times, there isn’t. Gold and/or trying to time the market are generally unsuccessful. I am sure ‘Uncle Joe’ would beg to differ, but my fancy computer programs that have compiled a hundred plus years of investments returns and economic data provide the facts to support my ramblings. I know no one likes to be confused with the facts. Sometimes we just want to be mad or vent. I get it, so do I. Heck, I am doing it right now. However, it’s best to save your emotions for your favorite sports team or movie and leave them out of your investing. Investing should be boring and based in fundamentals. The more boring the better! 

While I do not know what the coming weeks or months will bring, I do feel that many are wanting, or have already hit the panic button. Just remember that you are not parachuting here, you are investing.

Personally, I am using this as an opportunity to add to my personal investment accounts as I have faith in the American and Global economies. If history has taught us only one thing it is that opportunity always comes out of negative events. 

I do appreciate your continued trust in our firm. Please know I do not take these events lightly, but I know that this too will pass. 

Until next time,

Darin