By Bob Veres
Yesterday’s market declines — the Dow down 3.15%; the S&P 500 down 3.29%; and tech stocks, as represented by the Nasdaq index, off 4.08% — were entirely within the normal range of mini corrections, which we’ve experienced numerous times since March 9, 2009. But they represent an interesting test of character for the press and market pundits.
The most responsible voices in the press and elsewhere point out that market corrections are normal, and fear of market corrections works to the investor’s advantage. Fear of incidental declines is exactly why investors demand a higher return from stocks than, say, for cash.
The responsible voices will point out that being able to control your fear is one of the best ways to generate higher returns in your portfolio. They will say — correctly — that there has yet emerged no way to know the future, and therefore we have no idea if this lurch in the market is temporary or the first sign of a significant downturn. Not knowing means any action you take is likely to be wrong — especially since the markets have always recovered to set new highs after every downturn so far.
But these declines always bring out the opportunists who do everything they can to feed the fear. To get clicks or draw attention to themselves, they will predict disaster, and claim to know what’s going to happen tomorrow or in the next week or two. They’ll make it sound as if this one-day reversal is a clear hint of doomsday — and of course the normal fear mechanisms in the human mind are programmed to pay attention to warnings like this.
Your best course, which your rational mind already knows, is to simply tune out the pundits who yell “fire” in a crowded theater. You know they don’t know the future any more than you do. Stocks just went on sale, albeit a little bit, and if you’re in accumulation mode, you might hope they drop a little more, so you’ll be able to buy cheaply and hold on for the recovery.
Your rational mind knows that panic seldom leads to a good outcome; please, if you can, give it your attention amid the screaming and shouting that is sure to show up in the news this week.
Continue Reading
Other articles filed under Market Commentary
The Morgan Report 2024 Q3: Review : Waiting on a President
October 9, 2024 - “Looks like you’re a little stuck not doing anything. What are you up to?” “Well, I’m just waiting on a friend…” That tends to be the state of mind for many folks that are trying to make investment decisions. They...
Continue Reading
The Morgan Report 2024 Q2: Review : Time Waits For No One
July 12, 2024 - The Rolling Stones classic “Time Waits For No One” is a reflection on the passing of time, the passing of friends, and the passing of loved ones. It’s a wonderful song with a precise and beautifully crafted guitar solo by...
Continue Reading
Artificial Intelligence Investment Opportunities
April 24, 2024 - In a new video, CERTIFIED FINANCIAL PLANNING PROFESSIONAL ™ Morgan H Smith Jr., Partner & Advisor with WorthPointe discusses opportunities for investors to participate in the growing field of AI. A secret, it’s really his AI-generated avatar communicating his thoughts...
Continue Reading
The Morgan Report 2024 Q1 Review: 3 Simple Ways To Reduce Risk
April 18, 2024 - After periods of robust stock market performance, many investors feel like they might want to reduce their risk or exposure to stocks as they foresee an inevitable downturn right around the corner. They may be right, they may be wrong,...
Continue Reading
The Morgan Report: 2023 Q4 Review Outsource Busy
January 26, 2024 - Everyone I’ve been speaking with lately agrees that 2024 has hit with a bang and everyone seems to be very busy. Thankfully, it seems that it’s a good-busy with family, work, travel, and projects. The double-edged sword of a relaxing...
Continue Reading
- The Morgan Report Q3 2023 Review: Breaking Bad… Behavior
- The Morgan Report 2024 Q1 Review: 3 Simple Ways To Reduce Risk