Oct 16th, 2008
Up, Down, and Around: Keep an Even Keel with the Stock Market
Volatility in the stock market has been very, very high, and the market has mostly gone in a direction that’s down. But not on Monday, where the indices posted double digit percentage gains. That said, the markets are still down mightily from the start of the month, and while anything is possible, there’s a lot of ground to cover before October 2008 can hit the break even point–never mind a profit.
Still, as the stocks go up, down, and all around–more twists and turns this year than a roller coaster–perhaps the most important thing to do is keep an even keel and maintain your perspective. One day, even as big of a gainer as Monday was, does not a bull market make; in fact, one day is just another day on the road to retirement or whatever other financial goals you have in mind–just like one horrible day, or even one horrible week (like last week was), does not in itself constitute financial doom.
Yes, I’m happier with my portfolio right now than I was over the weekend. That said, I don’t expect that 2008 will end up being another year with positive returns in the market–all I can hope for (and I hope for it with a lot of certainty) is that when I’m really retirement eligible (not from my current job–I’ll retire the second I’m early retirement eligible there and find something else), my portfolio will have grown considerably from what it is now. And in order to get there, I’ll endure lots of ups and downs along the way, and I’ll do so because I believe that long term, history will repeat itself and my portfolio will do just fine and dandy. And that’s the lesson in all of this: when things go great, don’t get too high and when things go poorly, don’t get too low. Eventually, things tend to right themselves–they always have so far!
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A conservative srategy in terms of saving, investing and living is the best strategy. Like you referenced, markets and life in general is cyclical so in a few years we again be talking about why houses are so expensive and stock prices are so high!