What Happend in the Market This Week?
Oh my goodness! If you have been watching the stock market at all the last five days, it was looking like a total “ice bath” or stock market meltdown. You know what I saw? EVERYTHING ON SALE!! And you know a girl loves a good sale. So on Wednesday, March 10, 2018, I sold $20,000 in bonds, which were doing fine–or at least stable. Then the next day I bought about $7,000 in a Fidelity NASDAQ index fund and $10,000 in a Fidelity Total Market Fund. Two funds I already own. And today? Well today the market could have gone up or down, and it went up. But I don’t care, I’m in it for the long haul. I got those shares at a 5% discount. I kept $3,000 in cash, because I wanted to hedge a little, just in case in dropped more today I could say, “I have $3K more to invest.”
Don’t Act During Volatility
Normally I don’t act during a volatile period. However, I have been eyeing one of my lackluster intermeidate bond index funds and have been wanting to invest more aggressively–so I was waiting for an excuse to sell and buy some stock “on sale.” The chance came. Yes, I watched that same IRA lose $13,000 this past week, and I read all the doomsday rhetoric, but the worse it got the more excited I got. So I made the plunge.
I don’t recommend trying this if you’re not really familiar with and comfortable with changing up your portfolio. I’ve been investing in retirments accounts through two recessions: 2001 and 2008. I’ve seen some of my accounts lose 47% of their value and not recover for years. I’ve sat all warm and comfy in the safety of bonds and 10% returns during those horrible years. But guess what? As those bonds kept me warm and fuzzy, the stocks I ignored in their states of destiution came roaring back and far surpassed the performance of those post Thanksgiving elastic-pant bonds. Comfy, yes, but not doing you any long term favors. Unless, of course, you’re too close to retirement and don’t have 5-7 or even 10 years to wait out a stock market recovery.
Ignore the News Churn of Opinions
I rarely read the news. But I did the past few days to see what everyone was saying. The news, during the bad days was, “Why Trump is Blaming the Fed”; during good days, “Why There’s Nothing to Worry About.” Some called it a “correction that’s long overdue,” one likened it to a rubber band, “it will snap right back.” All conjecture, all speculation. The stock market is rational and emotional because as companies we post earnings (rational) and we make decisions to buy and sell (emotional). It’s an oversimplification, but you get the point.
Challenge: For one month, daily check how the markets are doing, red or green, down or up, on Yahoo Finance. This is part of getting familiar and comfortable with the fluctuations.
You’ll start to see patterns. You’ll recognize that news, interest rate changes, international discussions and the weather can affect the market. If you have an IRA (like a 401K rollover or Roth), check that weekly, and see how your long term investments fare, despite the daily hiccups in market prices. Want a recommendation for a 401K rollover brokerage firm? Fidelity is my first choice, Vanguard is my secoond. Both have a wide variety of low cost index funds that will keep your expenses low and diversification high.
Good luck, and look at a “red day” as a sale day. Look at a green day as good news for your already invested funds. Win, win. Anytime your saving and investing wisely and consistently, it’s a win!
xo, Amanda
