Updated: Jun 17, 2020
It’s human nature to react. Something happens to us at some point in time and we want to do something back – to react. Someone smiles at us and we instinctively smile back. Someone cuts us off driving and we want to let them know how we feel about it. Someone does us a favor and we want to return that favor. Someone lashes out at us and we want to neutralize the situation.
Doing something – anything – a reaction is somewhat of a human instinct.
So… You just got punched in the mouth by the stock market. Now what?
If you immediately got up off the floor and swung back, you likely missed (graph below):
S&P 500 Historical Values – Last 90 Years
If you got up and ran away for fear that you might get punched again, well you’re probably going to get punched again (graph below):
So what can you do?
When an action is performed on you (good or bad) it’s always best to stop and assess the situation rather than instinctively act. Determine your next steps carefully, thoughtfully and deliberately; and then react.
This is easier said than done of course, but the next time a driver cuts you off, think about how you can react safely and securely without causing any harm to anyone or yourself.
The next time someone does you a favor, think about how you can repay that favor in a thoughtful and meaningful way.
The next time someone lashes out at you, think about where they might be coming from and use empathy.
The next time someone smiles at you… well, instinctively smile back. Always smile 😊
The take-home here is to ensure you have a framework for long-term investing, and to ensure your emotions (excitement when markets are up, fear when markets are down) don’t cloud your judgment in sticking to that framework.
Any good financial and investment advisor has likely already articulated this framework to you, so if you’re already working with someone and need a refresh on the investing framework in place for you and your portfolio, it’s best to revisit this with your advisor and spend some time understanding how your portfolio is positioned to ensure you’re on track to meet your long-term financial goals and objectives.
Know that if you have any questions about your financial plan, would like our opinion on what this current financial landscape means for long-term investors, or would like a refresh on the framework we have in place for times like these, please never hesitate to reach out.
We are available and accessible to you any time through email, phone or teleconference (video).
Be well and be safe,