It sure seems like Mr. Market is back to pay us all a visit.
Last week as two year treasury yields briefly rose above ten year yields, the market decided that was the perfect time to panic.
Warning bells of recession started tolling in the air, with talking heads warning us that this signal is one of recession coming sometime in the next two years.
I and many of my personal finance friends simply yawned and went back to living life. Unlike a lot of folks writing about money out there, I was an investor back in 2000 during the dot-bomb and 2008 during the Great Recession. My formative investing years were from the year 2000 – 2010, when the S&P 500 was down 0.95% on an annualized basis.
So I’m not afraid of a down market, even a protracted one.
But I also know a lot of people out there have had the pleasure of only experiencing the up market. Similar to someone who started investing in the early 1990’s, they may think markets only go up forever. Or they may “know” that they won’t be one of the ones to panic – but have never experienced what it really feels like when your money evaporates at a rapid pace.
This Time It’s Different – 24×7 News & Instant Access
Now, I’m not that old. We certainly had internet access back in 2000 and 2008. It wasn’t like the 1987 crash where people had to call their broker or wait for their statement in the mail.
BUT – information was harder to come by back then.
People didn’t really have smartphones. I got my iPhone in 2009, as a matter of fact, and early on most websites looked terrible on mobile devices. We had 24×7 news, of course, but not really 24×7 access to the news unless you worked in a financial firm (or snuck a peek at the internet during lunch).
Social media was also relatively primitive at the time, so panic about the market was mostly limited to the few forums and sites that did exist.
Now the news spreads instantly and blares all over your phone in real time. You can log into handy apps and see up to the minute counts of just how much money you’ve lost.
I love most things about my smartphone and the instant, quick access to information it brings, but I don’t think this is an advantage. The constant blaring of gloom and doom can cause people to make sub-optimal investment decisions. They may pull their money from the market, or refuse to invest, because they just “know” the market is going down/recession will hit.
Sorry to say – none of us know. Not really. We’ll only know we’re in a recession once we’ve been in one for a while. And we’ll only know the market has hit bottom when it’s in the rear view mirror. The best thing you can do for yourself is set up a solid investment strategy you can feel confident in, ignore the noise, and go live your life.
Parody – Yield Curve Inversions Will Doom Us All
This time around, the 24×7 doom and gloom of the news got me rolling my eyes so hard my husband and I decided to make a parody video.
Introducing a random white guy in a suit (portrayed convincingly by my husband), coming to tell us all how we are doomed – and explaining what a yield curve inversion really is. Hint: it involves both smiles and frowns.
My Top Recommended Articles For Managing Mr. Market
In times of wild market swings, I’m going to suggest three old (but still relevant!) articles I wrote during past swings in the market.
My patent not pending ostrich strategy is what I used in 2008 to manage my finances with great success. It essentially involved ignoring my money for over a year, and continuing to invest automatically. It certainly served me well in the end.
Speaking of Mr. Market – are you familiar with his story? Be sure to check out more below on how he works & why he’s crazy.
Looking for more concrete advice on things you should do when the market goes haywire? Look no further than these ten tips.
Maybe you’re not feeling as solid in your investment strategy as you wish you did. Do you have an investment policy statement? If not, I highly recommend creating one today.
I Want To Hear From You
How did you feel during last weeks bump in the road? Did you feel nervous, or annoyed at the doom and gloom reporting? What did you think of our parody? Let me know in the comments.
I would love to stay in touch!
Be sure to follow my blog for more great posts via e-mail or WordPress, or connect with me on Facebook or Twitter and say hello! You can also check out what I’m buying or baking on Instagram, what I’m pinning on Pinterest, or the subscribe to the latest videos I’m putting up on YouTube.
10 thoughts on “Yield Curve Inversions Will Doom Us All – Parody & Real Advice”
We get market updates and emails from our Financial Planner. I’m sure he gets a lot of worried phone calls and messages from upset clients so I sent him a short note to say: “Hey, we’re all good! Solidly in the ‘do nothing’ camp.”
We’ll ride this out since we currently have many years ahead of us. I missed the 2000 dot-com bubble by a couple years, but was in the market during the 2008 recession.
This too shall pass.
It sure will! Market chaos can last for a long time, but eventually it will likely pass and everything will continue to move forward
The video is awesome!
I didn’t do anything specific in 2008, and have watched my accounts grow since. I’m thinking this is a good way to do it. There are a few things I need to move around just because it should be done, with no regard to what the markets are doing.
Thank you for providing excellent content, and random white guy in a suit for the guest appearance!
Thanks Jacq! It was fun to shoot and edit the video. Fortunately I have a husband who is patient with my crazy ideas 😃
While the 2008 hurt me in job prospects as I was finishing studies in 2009, this time I think I have a better sense of things. My preparedness for the down-swings and maybe the crash are:
1. Set stop/loss to the stocks which I feel are overpriced and will go lower than when I purchased them. I’d rather make lesser profit than go for a loss.
2. For my monthly Index/ETF investments, do nothing, like an ostrich.
3. Save for a timed purchase. This sounds like timing the market, but with some select stocks I plan to buy them when they are 20-30% cheaper than today, I am saving for that.
Sounds like you’re well prepared. A lot of folks do like to keep some “dry powder” to deploy in case of a downturn
Thanks for the attempt at keeping things lighthearted around here. The news can get so depressing that I have to take regular news/social media breaks as a natural mood elevator.
My fiance was also heavily invested in 2008, and I am grateful we have his experience to draw upon this time around. Neither of us are feeling too anxious or depressed about a down-swing. Instead, we’re anticipating it, and looking forward to investing more heavily once the markets do get pretty low. Right now, we’re just saving up cash. And, since I’m almost done paying off my student loan and car debts, a down turn would mean I can start maxing my investments at a lower buy-in. So, not all bad from our perspective, though I am sure in the short time it might hurt a little!
Congratulations on being close to paying off the loan & car! That must be so exciting
Love the concept of the Ostrich approach! That’s exactly what I did in 87, 2001, 2007-9 and somewhat at the end of last year. Each of those episodes reinforced the benefit of having a portion of my overall portfolio in bonds, or bond like instruments. Now it’s also easier to be able to see the entire portfolio at a glance rather than having to update an excel spreadsheet with current prices.
Having just retired, it’s a bit more challenging as I test my updated asset allocation and no longer make the semi-monthly contributions to my 401(k), HSA, deferred comp plans…and am still waiting for a few new recurring payments to become established and predictable.
Thank you especially for Random white guy in a suit…you’ve both got me smiling this morning!
I passed along your message to my husband and it made him happy to hear you enjoyed it!