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!
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