Day 2 of 12: Do two turtle doves signify twice the peace of just one? As financial planners, we believe that peace of mind is a byproduct of financial planning. But Peace of Mind is hard to find in a world of 24-7, always-on, news cycle.
Today I offer a serious thought experiment for anyone who owns stocks and closely watches their portfolio or regularly listens to the news about the market.
On Christmas Eve 2018, the U.S. stock market was only open until 1:00 PM; but that was enough to drive the indices into “bear” territory (defined as being down by 20% from a recent high). Despite the fact that it was Christmas Eve, reporters were all over it on the evening news broadcasting every plausible explanation that they could come up with. If you watched the news that night, try now to recapture your feelings and the thoughts that were behind them. Did you succumb to shoulda, woulda, coulda thinking? Were you asking yourself, “If only I had sold sooner, bought something different, or . . . you fill in the blank.” For those of you watching the market on Monday or listening to the news, I dare say that most of your thoughts were anything but filled with Peace. If you are like most people, your thoughts were likely fear-inducing. But the truly important question is what action or reaction did those feelings cause? Hopefully, none.
After being closed on Christmas Day, the day-after Christmas produced the single largest daily gain ever seen in the DOW 30. It was up 4.98% (1,086 points) in a single day of trading. Now what were your thoughts? and feelings? Do you feel a little lighter than you did on Monday? A little more at peace? After hearing that the market rose nearly 5%, did you succumb to FOMO (Fear of Missing Out) because you believe you should have taken some action at the market open to shore up your stock holdings? If FOMO is an issue for you, check out this post from last year.
Acting upon our feelings all too often leads to regret. Realizing that is perhaps the first step toward improved portfolio performance. Those feelings are driven by thoughts and beliefs about the market. It is our thoughts and beliefs that we can control and even change. It is important to acknowledge our feelings, but it is more important to think clearly. As fiduciary investment professionals, that is our business.
I believe that this kind of self-evaluation is more important than watching the financial news. At least self-improvement is one thing you can personally do something about. It could be your pathway to Peace of Mind.
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Right on Scott – as Jack Bogle opined, “… stay the course …”.
Thank you Scott for your thoughts and wisdom and your interest in not only in your clients but people in general. Have a blessed and prosperous New Year!