A friend posted a link on Facebook from MSN titled 11 Health Habits That Will Help You Live to 100. Quite a few of them can apply to investing as well. An ongoing theme on this site has been that it is guaranteed that there will be years that the stock market will go down. Based on history this will happen 25-30% of the time but either way, in the future there will be down years.
It is also guaranteed that there will be years that we will lag behind whatever the market does. Both of these are guaranteed and if you have any time behind you investing you have already gone through both of these and you've lived to tell the tale.
The tie in to the article is point number 7 which is to be less neurotic. Right here, right now while it is easy to be rational if you know head of time that the market is going to have a down year occasionally and that you will not always beat the market and both have happened to you before then there should be less of an emotional reaction when it happens. This should also make it easier to stay disciplined to whatever your strategy is.
The other point that can tie in directly was point number 1 which was don't retire. The connection made in the article is the observed tendency for people to become less active once they do retire. This is well covered ground here for several different reasons with the most practical reason being that for many people stopping work altogether will not be an option for financial reasons. Working less is very plausible and I think my belief in spending time figuring a way to monetize something you love doing is also plausible.
Obviously a thread like this on a blog is going to be greatly influenced by the blogger's priorities in life. Anyone reading this site for a while probably has a sense of what my priorities are and things in the article relate for the most part. Portfolio success and financial success is much easier to achieve when you have your priorities sorted out. When your life priorities are sorted out then you have a better chance of managing your portfolio for what you actually need not what you think you need.
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4 comments:
Agree.
T
Since the 1950's we have always considered the U.S. "capitalistic" king of the world. However "bad" things got, the U.S. would always pull through. So even though markets went down 30% of the time, we had conviction that things would get better. That thinking has begun to change over the last 10 years. Long term confidence is eroding. The U.S. is lagging behind in many major areas. We can no longer assume the market will go up 70% of the time. It is very plausable for the market to plunge again and stay at an extremely low level for 10-20 years. Perhaps someday, the market will tell us the debt level is too high. This does not even discount black swans.
I agree with SEG.
As I remember the 'late 70s in the Midwest, as the economic cycle turned down, the mindset was to survive until WHEN things bounce/turnaround. It was a given that they would in a couple or few years.
Now I have no confidence they will. No confidence in government or corporate leaders, Wall Street, or the media. The wolves have submitted plans for the new sheep barn to the rancher.
You guys are curmudgeons with sour attitudes. I bet there were pleny of old-geezers in the 70s who thought things would never turn around...and then there were young optimists like yourselves who maybe didn't know any better.
Now that the shoe is on the other foot, thank goodness their are plenty of youngsters with unbounded optimism and people still dying trying to reach our shores.
History is full of bust and booms, better get used to it.
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