Well, here we are again. The stock market is tanking this October. All the financial news outlets are in hyper drive. The talking heads sound like they are all on meth amphetamines, yelling so loud and fast about how low it is going to go and where to hide.
Let me give you a tip: turn all that stuff off. Most of those people are talking about trading, not investing. Traders hold stocks anywhere from a few seconds up to a few weeks. Everybody else is an investor. So, all that media hypeness rarely applies to investors.
The interesting thing is that this is the third time this year that the market has dropped about 10%. In February, it dipped 12% and then in April, it went down 9%. Yet, with those two dips and the current drop, most stock indexes are still positive for the year. I’m pointing this out to let you know that stocks don’t always go up, especially in the short term. Another point to note is that we are entering the best six months to be invested in stocks, November through April.
The fact is, we were well overdue for a market dip and we just needed a catalyst to get it going (rising interest rates and/or tariffs possibly?). Now, I don’t know if the markets will keep going down over the next few days, weeks, or even months. But, I can tell you with a good amount of certainty that stocks will be higher a few years from now and nobody will remember this market drop. Knowing that, now is probably a good time to put some cash to work if you have been waiting on the sidelines for prices to come down. Investors that have a plan in place already know this and will quietly buy the shares of great companies at a bargain price from those investors that have no plan except to buy high and sell low (by the way, that is not a good plan).
The takeaway here is to stick to your investment plan and consider this dip an investment opportunity. If you don’t have a plan, now is as good a time as any to get one.
Joe Baker, CFP®
Baker Asset Management, LLC
joebaker@bakerassetmanagement.com
