Why am I saving and investing?
After a week like last week, it’s an important question. There are many reasons people save and invest, including to:
However, none of these reasons have anything to do with short-term market fluctuations.
Last week, major U.S. stock indices experienced a selloff, and we saw a dramatic downturn in stock markets. The Dow Jones Industrial Average was down 5.7 percent, the Standard & Poor’s 500 index lost 6 percent, and the NASDAQ fell 6.5 percent, reported Barron’s.
Those are big moves for a single week. The kind of moves that light up the emotion centers of investors’ brains and make them want to sell.
It’s not a new phenomenon. In 2002, in an article for CNN Money, Jason Zweig explained the brain’s potentially negative influence on investment decisions, “But in the world of investing, a panicky response to a false alarm – dumping all your stocks just because the Dow is dropping – can be as costly as ignoring real danger. For one thing, it can cause you to flee the market at a low point and miss out when the market bounces back. A moment of panic can also disrupt your long-term investing strategy.”
So, what happened last week? In short:
That’s a lot to take in over the span of five days. The critical thing is to recognize these short-term events are unlikely to change your long-term financial goals. Financial decisions, including buying and selling investments, are important and can be life shaping. They should be grounded by long-term financial goals and foundational principles of investing. They should not be based on the brain’s instinctive fear and flight response.
let’s take a good news break. After last week, we could all use some good news. Here are 10 intriguing headlines from the Good News Network:
There is a lot of good news in the world. Unfortunately, it doesn’t pack a wallop like bad news does, so we hear less about it.
Weekly Focus – Think About It
“When the weather changes, nobody believes the laws of physics have changed. Similarly, I don't believe that when the stock market goes into terrible gyrations its rules have changed.”
--Benoit Mandelbrot, Mathematician and polymath
https://www.barrons.com/articles/why-did-dow-drop-1-400-pick-your-poison-1521852744 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/03-26-18_Barrons-Why_Did_Dow_Drop_1400-Pick_Your_Poison-Footnote_1.pdf)
https://www.ft.com/content/e4e95b6c-2dac-11e8-9b4b-bc4b9f08f381 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/03-26-18_FinancialTimes-Chiefs_Hubris_Steered_Cambridge_Analytica_to_Data_Scandal-Footnote_7.pdf)
http://www.barrons.com/mdc/public/page/9_3063-economicCalendar.html?mod=BOL_Nav_MAR_other (Click on U.S. & Intl Recaps, then "Factory sector accelerates, housing prices climb") (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/03-26-18_Barrons-Factory_Sector_Accerlerates-Housing_Prices_Climb-Footnote_10.pdf)
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* This newsletter was prepared by Carson Group Coaching. Carson Group Coaching is not affiliated with the named broker/dealer.
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