Worrying about the future is something I choose not to do.
- Watching a stock market ticker is a sure recipe for anxiety.
- Ups and downs in the market means it’s working like it’s supposed to.
- One benefit of the lows is buying stocks at cheaper prices.
The first time I recall being a bundle of nerves, I was 4 years old. My mom had boarded a TWA flight and taken off for parts unknown. Two years later, my dad packed his bags and headed back to Vietnam, and I thought I would not survive that tour (mostly because I was afraid he wouldn’t). It should come as no surprise that I have an anxiety disorder. However, I do not worry about what’s going on with the stock market, and here’s why.
1. Fluctuations are normal
For some of us, being on a diet means fighting the temptation to weigh ourselves more than once a day. Weight loss groups recommend against it, and with good reason. Our weight fluctuates throughout the day. Checking the value of my portfolio too often is like weighing myself several times a day. I should expect ups and downs. It’s natural.
Even the most solid investments drop in value. For example, when a company founder and CEO dies, it’s natural for its stock to dip. People wonder about all kinds of things, including whether the company will be sold or whether the next CEO will be up to the task. Idle gossip about a company is enough to tank its stock for a few days, and a so-so company can see a boost in stock value following one particularly good news story. It’s a bit of a mirage.
When I purchase stock, I do my homework. I’m buying a small piece of a company I believe in. I’m neither speculative nor brave enough to buy shares assuming it will make me wealthy. The point is to allow my investment to grow with a trustworthy company.
I buy and hold stock because I believe I will benefit from a slow and steady increase in value in the long run. Given the number of factors that drive stock prices, ticks up and down means nothing.
2. Bargains are beneficial
Many proclaimed that a horrible, long-term recession was upon us a few months back (or maybe it was yesterday). I’ll admit, I had a moment of panic. When the time came to fund my solo 401(k), I thought, “What if they’re right?” and “Should I hold this money in my bank account for now?”
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The answer to both of these questions is no.
Typically, it’s considered a bear market when stocks are down by 20% or more. But one of the reasons we entered a bear market was because so many people decided to sell off their investments. That means I can pick up stocks at a bargain basement price. I might not appreciate it much today, but when the market goes back up, my portfolio will be that much plumper.
Growth — whether it’s immediate or slow and steady — leads to the same place. While it’s not always the case, history shows that a strong bull market often follows a bear market. And while that would be great, even if it slowly crawls out of hibernation, I’m OK with it. I picked up new stock on sale and can wait for it to grow.
I frequently remind myself that if stocks did nothing but increase in value, I would never be able to buy in. I need it to drop so I can afford to be in the game.
3. Life is measured in moments
As I recently reminded a much younger colleague, the average American is on this planet a little less than 29,000 days, according to the United Nations’ World Population Prospects data. To be robbed of joy even one day due to fluctuations in the stock market is a waste. I can’t control which direction the market moves, but I can control how I choose to look at the situation.
I recently read an article on WebMD about what to do when the stock market gets you down.
There’s a great line in the first paragraph that said, in part, “The ups and downs of the market may be unavoidable … but your stress level isn’t.”
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The article suggests ungluing yourself from all the information coming your way. If you’re constantly turning on financial news and are anxious about what’s coming next, take a break. It’s unhealthy to believe that absorbing scary information can change what’s happening.
The best any of us can do is to devise a solid plan for investing, expect highs and lows to impact the value of our portfolios, and focus on enjoying the day in front of us.