Stay calm. Breathe in, aaaand breathe out.
You’ve likely been hearing through the media that the stock markets are falling. We are in crisis, recession, dark clouds etc., etc. According to the media, it’s the end of the world as we know it.
Not so fast! Remember that this has happened before, most recently in 2000 and 2007-08.
It is simply the nature and history of the stock market. It may (or may not depending who you ask) be happening now—and it will happen again. History shows us this. We just don’t know when – and even the most brilliant minds can’t agree or predict when.
The up and down cycles of the stock market serve to correct some trends but also provide potential buying opportunities for long term investors. While the weak of heart are panicking, the brave hearts are gleefully buying stocks at bargain prices.
‘Losing hurts more than winning feels good’ said Scott E. Couto, President of Fidelity Financial Advisor Solutions. Well said—and very true if you think about it.
It’s a basic human emotion.
And the media loves it. Heck, many readers and the viewers love it too. Nothing makes a bigger headline or #hashtag than doom and gloom and/or impending Armageddon. It feeds the frenzy that then feeds upon itself.
It’s during times like this that normally sane investors start to question their motives, their plan, their advisor, their intelligence. Surely the experts and the media talking heads must know better than they do? Yikes! Stop the madness I say!
But you ask, how can you remain calm while media and other naysayers are not?
Remember that nothing goes up forever in the stock market. Corrections are a normal part of investing and have been happening since the stock market was invented close to 200 years ago. (The New York Stock Exchange started in 1817, the Toronto Stock Exchange in 1861).
There are numerous charts and graphs to illustrate this if you need visual, hard core proof of the market cycles. The ‘market’ is only a piece of all investments and sometimes it is only a sector or country of the market.
What we are hearing about now is China and Greece and most of the impact will be felt there and in regional markets. But today with global markets and international corporations and agreements, there will be some blowback in our backyards.
Your personal investment portfolio may feel less of an impact, or potentially none at all. Perhaps you have mostly Canadian stocks, or bank GICs, or any or none of these that will more easily ride out any catastrophe that might be predicted.
The most important thing to do right now is to not make any emotional decisions without speaking with a financial professional who can help put your portfolio into perspective. Many investors—yes even experienced investors—have regretted acting too impulsively when their portfolios dip.
Develop an investment plan aligned with your goals- and stick to it. Be sure to review your plan annually with your investment advisor to ensure it still fits your needs.
Breathe. And step inside from the ledge –please.