The last few months have been pretty turbulent for investors and there doesn’t seem to be an end in sight. We have to deal with government shutdowns, tariffs, investigations, wars, and a lot of tweets. Trying to keep up with all the news is like drinking from a fire hose. It’s times like these that test an investor’s intestinal fortitude.
For investors that don’t have a crystal ball, you are probably asking yourself, “Do I sell now and hope to time it right when I buy back in?”. That is tough to do and I don’t know anyone that has ever been successful at it.
If you have a plan in place, the money that you have invested right now should be money that you won’t need for at least 2-3 years.
Money that you need in the next few years shouldn’t be invested in risky investments like commodities, real estate, stocks and most bonds, because you might not have enough time to recover from drops like the one that is happening right now.
For those that have investments with no need for that money for, say 5 years or more, stick to your plan. If you have cash set aside for market dips, this is a good time to start buying a little bit on the cheap. For people contributing to a retirement plan every paycheck, you should be loving these market drops because you’re getting more shares for the same dollar amount coming out of your pay than you were a month ago.
Sure, stock prices could go lower, but anyone who bought after the tech wreck at the beginning of this century or in 2009 after the financial crisis is very happy they had the conviction to buy when everybody else was selling.
Hang in there and don’t let your emotions drive your investment decisions. Stick with your plan and stay the course. Your future you will thank for it.
By the way, the roller coaster pictured above is called the Boomerang in Siam Park, Bangkok. Yikes!
Joe Baker, CFP®
Baker Asset Management, LLC
joebaker@bakerassetmanagement.com
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