If you think about it, people are held at the mercy of the rich. We willingly turn over our hard-earned money to those who control the market and blindly say “take good care of my money, now!” Yeah, right… So, how to do you deal with this necessary evil? And, how do you cope with the loss?
Bear in mind: Younger investors have the luxury of time, but as you grow older…their gambling with our lives! You might get the monet back, but you’ll never get the lost time back!
That’s some pretty out-there thinking, **Jinx **ol’ buddy.
At a minimum, anyone in any situation takes the least-bad alternative. You can invest, you can save, you can hoard, or you can consume it all today. Those are the only 4 potential options. (plus plenty of sub-options).
Even if all 4 have major drawbacks or risks, you gotta do something.
The evidence shows that most people prefer the riks of investing or simply consume it all. The middle two choices are apparently less attractive.
The Illuminati?
I invest every nickel I get into food, shelter, and clothing, if there is anything left for clothing after I take care of the food and shelter thingies.
I keep a close eye on things - not only my investments, but things going on in the world that might affect them. We were convinced that the hard times weren’t over yet, so we kept our investments in as-safe-as-you-can-get money markets* (the returns aren’t great, but we’re making money almost every quarter, rather than losing).
You have to take what the government and banks say with a grain of salt, too - banks give advice based on what’s best for THEM. If it matches what’s best for YOU, fine. If not, go with what is best for you.
*I got a little bold with one investment and moved it into one-step-less-than-as-safe-as-it-gets money markets. I might move that one back to money markets, too.
Because you’re not really losing money. You bought something with it so you still own it. You would only lose money if you tried to sell it. Now that doesn’t mean it doesn’t suck if you were planning on selling it soon, but you still haven’t lost anything.
Take my case, as I just looked at it last week. I had 114K, yesterday I had 107K, and as of today I have 101K. That’s 13K I’ve ‘lost’ just in a few days. Yet I haven’t lost anything as I still have the shares, it’s the share price that’s gone down, but since I can’t sell I don’t even worry about it. Actually I like it since I’m buying more shares at a lower price.
So unless you’re really getting ready to sell then don’t worry about it.
How do I cope? By reminding myself that it’s all paper losses (and paper gains). The value goes up, the value goes down, and history has proven that over time, it’s more up than down. I don’t live off of my investments (yet) so I’m not in panic mode. But I’m sure as hell buying more now that things are at bargain basement prices.
This.
Sure I wish I bought shares today instead of last week. But to be fair, I’m happier that I bought shares last week instead of two weeks ago. I’m also happy that I didn’t put all my money in last week and can buy more at these lower prices. The market could go down even more, but if you only buy when the market it up, then well that’s not a good plan.
Also, looking back, wouldn’t it have been awesome to have bought into the market back in 200x when the Dow was under 7000? So when the market drops, it hurts, but it is also an opportunity. Back when the Dow dropped to 7000, I didn’t have any money, but now I’m hoping to make the best of the current situation.
I was crushed when I saw how much the Dow dropped on Monday, and I had some scheduled investments for Tuesday which I considered canceling. But I’m glad I decided to let them go through because they already bounced back up a good bit.
The volatility really sucks but if you get into investing knowing you’re in it for the long haul this is the kind of thing you have to brace yourself for.
I was buying then. I hired on in 2000 and didn’t understand all the coworkers who stopped their paycheck deductions for their 457 mutual funds because the market was tanking. It’s called buying low, folks. I don’t know if I’ll get the selling high part right, but I’ve got buying low down cold.
If nothing else, I didn’t have to pay taxes on the income that went into those funds.
I cope by :
Get into the microloan market, and be held at the mercy of the poor instead.
I cry a lot. I’m old, and have no time to recover. Luckily my daughter has a basement if the market drops too much or Illinois goes bankrupt and stops pension payments.
The problem is that people get into this “buy high, sell low” mentality. They buy overhyped stocks and then sell when the market tanks. You need to use opportunities like Monday to buy cheap shares in solid companies. I’m actually sort of pissed the market went back up so fast.
Learn about how to invest. Seriously.
The number one lesson to understand about financial markets is that just about every sales person, pundit, analyst, broker, investment bank makes their real money when you ***buy ***something. Not when you hold, not when you sell, but when you buy. (I exaggerate but only slightly.)
Market goes up. “Great time to buy, it’s going higher.”
Market goes down: “Great time to buy, it’s cheap and going to go higher”
Market goes sideways: “Great time to buy, it’s due to go up.”
And variations of the three.
Understanding the rare people that actually are not trying to sell you something is the first thing to learn. put it another way, if you don’t know who the patsy is at the poker table when you sit down, then you are the patsy. Same thing holds very true with the markets. Sounds at least you recognize that you are the patsy.
Buy on a regular basis, and then hold over the long term. Diversify my risk in both income and growth instruments. Reinvest the dividends. Watch the stock market correct during weeks like this… wait a bit until the dust clears and, if I’m in the mood, buy a little extra while things are low.
That’s how I cope.
Disclaimer: I am a long way from retiring so the cyclical ups and downs aren’t really a concern.
Diversify, dollar-cost averaging, ignore the latest fads (buy gold! buy swiss francs! invest in Brazil!
buy 36 months of MREs! Buy homes to flip!). You should adjust ratios of where you are invested but not go whole hog on one item.
One thing that I have done for 30 years is at the end of each month is I write out on a sheet of paper what the portfolio is worth and keep those pages. It makes it easy in looking at the October 1987 crash and when people at work were telling me the new Great Depression was here (Dow was something like 2,000 then). I went from $12,000 to $10,000. Small potatoes to what I have now and I am not some rich hedge fiund manager. There will be cycles of good times and cycles of bad times but the long trend of history is improvement.
Maybe you need to hang on to your expensive paintings instead. [bolding mine]
