Back in the late 2000’s, when I was in my late 20’s, investing was making me anxious.
We didn’t have a lot of money saved back then. We had just bought our house in 2006, the value of which was crashing as news of the subprime mortgage crisis and mortgage backed securities flooded the airwaves and the internet. Every single month that we automatically invested in retirement and college savings, that money seemed to vanish in a matter of days as the market crashed repeatedly.
At that point I had been tracking my net worth for my entire 20’s. I would frequently log into my accounts to check their value. It was fun to pop onto Zillow to see what kind of extra money I had made that month! Logging into my investment accounts was equally entertaining.
But while this was lots of fun when the market marched upwards, it was anxiety producing when the market was crashing.
That’s when I developed what I would come to call the “ostrich strategy”- where I just didn’t look at my account balances for a while.
A long while.
In honor of the ostrich strategy, I’ve made a short video involving a cardboard ostrich made out of recycling. Hopefully you get a kick out of it, or your kids do – you can find it over on my socials.
Don’t do something, just stand there
John Bogle, founder of Vanguard, famously once said that, and I’ve found that advice has worked for me more than once. We investors have to remember that market crashes aren’t uncommon. Even in my lifetime we’ve experienced a ten year long “lost decade” where investors made absolutely nothing.
In this same context Bogle said “The principles of sensible savings and investing are time-tested, perhaps even eternal. The way to wealth, it turns out, is to avoid the high-cost, high-turnover, opportunistic marketing modalities that characterize today’s financial service system and rely on the magic of compounding returns.”
The promise of compounding returns may seem hallow when your contribution to your IRA, 401k or 529 plan seemingly vanishes overnight. I always remember that losses aren’t locked in until you sell. And that lots of people (and companies) want to take advantage of panic to try and make money off of you. Whether through trading fees, selling you on a “get rich quick” pitch (maybe an MLM? ) or a meme stock or crypto or something.
Does Anxiety Make You A Bad Investor?
Sometimes people on the internet will tell you that if you’re anxious by your account value dropping, maybe you shouldn’t be in stocks at all. But I personally don’t feel that way. I have a lot of empathy for people who have never invested in a real market crash, or a flat market that lasts for years. Many of them have been sold on the promise that investing will make them wealthy. When they learn it’s not a straightforward path to riches, and that they actually can lose money, it can make them anxious. And I understand.
Sometimes you just need to keep your automatic contributions going, stop looking at your balances, and go enjoy your life. Your accounts will be there later. And taking a break from looking at the balances may be just what you need to keep your strategy going.
So no, being anxious about your balances doesn’t make you a bad investor. It makes you human.
Now of course if you’re going to do this, you want to make sure you have a solid investing strategy and aren’t taking too much risk, aren’t in speculative investments that aren’t appropriate for you, and other such things. If you need help with that please consult a financial professional and not a lady on the internet who makes cardboard ostriches to illustrate financial concepts.
Do I still do the ostrich?
I’m no longer in my 20’s, I’m in my early 40’s. I’ve been through multiple market crashes-the original dot bomb in the early 2000’s, the Great Recession of the late 2000’s, the Covid crash, and todays volitle market. Now I’m a tougher investor, and I can look at my losses objectively and without anxiety. So I don’t practice this anymore. But I do tell people it worked for me in an earlier point in my financial journey.
Today I check my net worth quarterly. In fact the Q3 end is coming soon, and I’ll be updating my spreadsheet-the one that goes back to 2007- with the most up to date net worth. I expect it to be down despite my contributions. And I’m OK with that.
But I now have fifteen years of investing data. I would have had twenty something if I hadn’t lost my original spreadsheet along the way. I can clearly see all my ups and downs over the years. And I know that my contributions are all buying more, and more, and more shares over time.
It’s those shares that I expect would grow over the long haul. And any money I need in the next few years isn’t in stocks-becsuse I know they can go down and stay down for years at a time.
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Want to check out the complete ostrich video, where I made an ostrich out of recycling for your entertainment? Check out my socials – I’m on Twitter, Facebook, Insta, TikTok, Pinterest, and email email@example.com.