I got this email over the weekend, and it reminded me of why it is I ignore everyone… Or, should I say, those investing “experts.” Not my friends who email me ;)
So back in June of 2013 the market scared me and I chose to move most of my funds to a safer option with Vanguard (401k). Moved it to a fund that has very small growth but very little chance of losing. However back then it was at ~15,200 for the DOW and now the dow is about 17,000 or about 12% increase.
My problem now is I know that I shouldn’t have done that but how do you convince yourself it is a good idea to move it all back into the other funds even though it is up 12% from where it was when I did it in the first place?
Have you done anything like this and how did you get over it? I hate hearing over and over how the DOW is at an all time high and that just seems stupid to move all my money back right then.
Here was my response to him:
Sorry to hear man, that sucks. But honestly you’re not alone – it’s what millions of others do too and why people say to just ignore the news and pundits (and emotions!) as no none can predict anything. You gotta invest for the long haul and sit still – in good times and bad – to fully take advantage of the earnings in the long run. It’ll go up and down hundreds of times throughout our lifetime but you gotta be in it to win it! :) Also, better to learn this lesson early on with less money than later with a lot, eh?
Now is the Dow currently at all-time highs? I guess. But it doesn’t really matter if you’re investing for 20, 30, 40 years. So concentrate more on sound investments now and then avert your eyes later when emotions and panic hits the masses – though I know it’s easier said than done. Also, keep in mind that when stocks go down later – which they will – you’ll only be able to pick them up cheaper! It’s all about dollar cost averaging if you’re able to take advantage of that.
I could care less what the “experts” are saying or not saying because at the end of the day it doesn’t matter at all – no one knows the answer. If you believe the market will go up over time like I do, consider index funds which go up when the market goes up, and goes down when markets go down as it tracks the general stock market. Either way you definitely can’t go in and out based on emotion as that’s a total losing game as you now know :(
Again though, you’re not alone. You pulled the trigger and it’s done, so now it’s time to get back to it and be better the next time around. The good thing here is that you don’t have to touch the $$ for decades and decades (I think you’re young like me, yeah? in your 20s/30s?) so there’s plenty of time to watch it grow again – this is just a small bump in the road.
Oh, and yes – I have done something similar before, only it was trying to game the system by day trading vs based on the market being at an all-time high or whatever. I took out $500 (which was HUGE for me at the time – as I had no real savings or investments and probably had balances on my credit cards too!) and tried to buy stocks of Sirius Satellite Radio when it first came out. I’d pick up as much as $500 would buy early in the morning, and then throughout the day try to sell at higher prices and then buy back in when it dropped a few pennies/percentages, etc etc.
It didn’t work, and I ended up losing a good $300 of it until I called it quits forever ;) And it didn’t help that I worked at E*Trade at the time when everyone around me (aka the “experts”) were trying to make fast money and all acting like they knew what they were doing when they didn’t. We were all chasing the quick buck instead of playing the long game.
Other People & Things I Ignore
After responding back to my friend there, I thought I’d make this into a blog post and share some other people and things I typically ignore too – just like those highfalutin stock “experts.” These things rarely add any value to my life and/or usually depress me:
- Political pundits
- People on Facebook always trying to make you jealous of their lives (you know who they are ;))
- The things people/celebrities are doing
- The things people/celebrities are buying
- General TV News
- General economy news
- Toxic people in general
- And radio commercials. The worst! Always hawking expensive cars and shady loans!
The only two things up there probably worth explaining more is my general disregard to most news and economy updates – especially as a financial blogger ;) I’ll pay attention to it when I’m bored or specifically into a certain story, but the main reason I don’t go out of my way to follow along is because 95% of it is negative every time I turn it on. And rarely does it affect my life or goals directly.
To me, it’s smarter to focus on the stuff within our control rather than get caught up with all the noise out there distracting us. Unless you’re actually planning to run for office or change the world – both noble goals separating you from those who bitch about stuff and then sit back and do nothing.
That said, of course you still need to know what’s going on around you to be a better informed and well-rounded person. And fortunately being so glued to blogs and Twitter all day, I come into a bulk of everything I need to know when my friends and people I respect are discussing it. And usually civilly :)
Which leads me to the people and things I *don’t* ignore!
- People I love
- People I respect
- Things that bring joy to my life
- Things that make my life easier
- Things that are important to me and my values
Go back to that Ignore List up there and tell me if any of those things match with this list below? They don’t, right? I still get my fill of the news and advice that I need to live a decent life, but they come from my “inner circle” vs random/famous people who make a living spewing forecasts that are usually wrong in the end. As my good friend Kathryn likes to say – you never see them come back on TV and talk about all the times they were wrong, do you? They just keep going and pretend it never happened…
Here – watch this video she made, it’s hilarious (because it’s true!):
- Make investment decisions for the long run and sit on your hands when emotions are high
- Don’t day trade – even if your friend just made a million dollars (he’ll soon lose it)
- Do your best to focus on the things within your control
I deviated a bit from my friend’s email there, but hopefully it was worth it ;) What are other things we should ignore or pay attention to? What do you agree or disagree on me with?
[Photo cred: Rocpoc]
Jay loves talking about money, collecting coins, blasting hip-hop, and hanging out with his three beautiful boys. You can check out all of his online projects at jmoney.biz. Thanks for reading the blog!